Wider proxy voting scope behind Candriam 2016 activity 'surge'
Pan-European asset manager Candriam increased its voting activity significantly in 2016 as a result of it further widening its proxy voting scope.
The €107bn asset manager doubled the number of company general meetings it attended in 2016, to 557 from 258 in 2015, and voted on 72% more resolutions (6,993 versus 4,072 in 2015).
A spokesperson explained that this increase was mainly due to the extension of the asset manager’s voting scope to equity strategies outside Europe. It had been already expanding its voting internationally and continued with this in 2016, but last year it also broadened the number of funds for which it carries out the analysis that informs voting, he added.
The figures reflected a growing trend on the continent: In a study published yesterday, the French asset management association AFG said that its members’ international voting coverage had increased, with participation at general meetings up 13% in Europe ex-France, and 9% outside Europe. This reflected voting activity being extended to certain fund categories and countries, but also “the opening of this activity to new markets, notably Asian and emerging markets”, according to the trade body.
Candriam – which is headquartered in Luxembourg – attended the most meetings in the UK (20%), France (19%), and Germany (14%). It said that the main areas of concern in these countries revolved around the themes of director elections, share capital issues, and remuneration.
One-third of the group’s votes against resolutions related to director elections, while a third related to remuneration.
The asset manager voted against 37% of pay resolutions, including a proposed €7.2m pay package for the chief executive of carmaker Renault. With 54% of votes cast against, it was the first rejection of a pay package in France, Candriam said.
“The board of directors decided to ignore the non-binding vote of shareholders and endorsed the payout, stirring even more controversy,” it added.
A non-binding vote on pay was introduced in France in 2014.
The three top reasons for Candriam to have concerns about pay last year were poor disclosure (46%), remuneration not being linked to performance (20%), and excessiveness (15%).
The company engaged with more companies on environmental, social, and governance (ESG) issues last year than in 2015, it said. “Social issues” are becoming a more important topic for Candriam’s engagement with companies, catching up with the more ‘historical’ topics of governance and the environment, it added.
AFG’s analysis of the 2016 voting season for French asset managers found that, in keeping with the diversification of portfolios, foreign companies represented two-thirds of equities managed by the French asset managers, and accounted for four-fifths of the meetings they participated in.
AFG said the increased activity was a good indicator of asset managers’ engagement and that of the institutional investors mandating them. It attributed the developments to a confluence of factors, including a strengthening of corporate governance expertise within asset managers, and greater use of software, data processing tools, and providers such as proxy voting agencies.
It also highlighted French asset managers’ push to win business from foreign investors as a factor, saying that non-resident investors “encourage, even demand” extensive proxy voting practices.