Business practices and voting information
As part of our commitment to delivering superior investment performance to our clients, we expect and encourage the companies in which we invest to demonstrate the highest standards of corporate governance and best business practice.
We examine the share structure and voting structure of the companies in which we invest, as well as the board balance, oversight functions and remuneration policy. These analyses then form the basis of our proxy voting and engagement activity.
J.P. Morgan Asset Management Voting Policy and Corporate GuidelinesGuidelines for portfolios managed within the UK Guidelines for portfolios managed outside the UK
Proxy voting: UK and Europe Q4 2017
JPMAM manages the voting rights of the shares entrusted to it as it would manage any other asset. It is the policy of JPMAM to vote in a prudent and diligent manner, based exclusively on our reasonable judgement of what will best serve the financial interests of our clients. So far as is practicable, we will vote at all of the meetings called by companies in which we are invested.
Summary of key voting statistics
Meetings voted (UK):
Meetings voted (EUR):
Votes with management:
Votes against management:
*a further 26 meetings were not voted due to share-blocking and/or conflict of interest (JPM Funds)
The fourth quarter is traditionally the quietest of the year in terms of proxy voting volumes, with relatively little AGM activity in the UK and Europe after the peaks in the second quarter.
Summary of key activity
- J.P. Morgan Asset Management also opposed two shareholder proposals at BHP Billiton to amend the constitution of the company and call for a review of the company’s energy policy and climate risk disclosure. The resolutions were tabled by the Australian Centre for Corporate Responsibility (ACCR), which owns just 0.0045% of the shares of the combined BHP group. J.P. Morgan Asset Management has engaged extensively with BHP Billiton on energy policy and climate issues, and is satisfied that the company is already addressing these issues, producing a Climate Change Portfolio Analysis as far back as 2015.
- J.P. Morgan Asset Management voted against the reappointment of directors and remuneration at JD Wetherspoon at their AGM in November. The board currently comprises four executive directors, including the executive chairman, who is the founder of the business and holds 31.6% of the issued share capital, plus four NEDs, two of whom fail to meet our independence criteria due to tenure issues. Concerns over remuneration include significant basic salary increases granted to executives (8.3% to 16.7%), and SIP awards that are not subject to performance conditions. Founder Tim Martin has been an outspoken critic of corporate governance codes, calling them “faulty” and citing the “dangers” of not having directors “who were present during the Financial Crisis” (of 2008), stating in their Annual Report that there has been “almost no dissent or criticism from shareholders”, despite over 14% of independent shareholders voting against.
- In Europe, J.P. Morgan Asset Management voted against directors and remuneration at Eutelsat Communications, due to concerns over lack of disclosure. The cap on awards under the LTIP was increased significantly in 2017-2018 (60% for the CEO, 66.6% for the Chief Commercial Officer and 400% for the Chief Technical Officer), without explanation to shareholders. This was in the wake of 20% increases last year. Eutelsat is also under scrutiny from ESG specialists, following allegations from NGO Reporters Without Borders that the company was colluding with the Chinese government to suspend the broadcast of the independent Chinese-language television station NTDTV. The company has consistently stated that the interruption was due to a technical and irreversible problem with its only satellite covering the South-East Asian region. We would note, however, that Eutelsat has made significant progress in addressing issues relating to freedom of expression since the allegations were raised, and no new allegations have subsequently come to light.
- J.P. Morgan Asset Management also voted against remuneration at Barry Callebaut in Switzerland. While some improvements have been made to the variable pay structure, executive committee members continue to receive a substantial portion of their long-term incentives in the form restricted share units that vest in fewer than three years and which are not subject to performance conditions. This award structure does not provide a rigorous performance alignment and is not sufficiently long-term in our view, and falls short of the prevailing practice among larger Swiss companies.
- J.P. Morgan Asset Management met 22 companies to discuss corporate governance and strategy issues, in addition to our scheduled one-to-one meetings. Companies included Rio Tinto, Standard Chartered, Credit Suisse, KPN, Repsol and Air Liquide, bringing the total number of engagements for the year (not counting scheduled one-to-one meetings) to 277, of which 101 were meetings to discuss corporate governance issues at investee companies, 65 were consultations over remuneration arrangements and 40 were to discuss social and environmental issues at portfolio companies.
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