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 Q1 2019
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 13 meetings were not voted due to share blocking and/or conflicts of interest
The first quarter sees voting volumes in the UK and Europe start to increase as we head into the peak AGM season in April/May.
- J.P. Morgan Asset Management voted against the Remuneration Report at Micro Focus International. The integration of Hewlett Packard Enterprise business (HPE) has been slower than expected, following the USD8.8bn acquisition in 2017. This resulted in the company deciding to rebase the HPE Software Additional Share Grant (ASG) awards, intended to retain key executives and deliver the 2020 business plan. The rebasing has been effected by the issuing of replacement ASG awards, which extend the performance period ending September 2019 to the three-year period ending September 2020. Although the reference share price is unchanged, meaning the awards are no less stretching, the timeline for the delivery of the value is extended to accommodate the slower-than-expected realisation of the benefits from the HPE transaction. The amendment of in-flight performance conditions is generally considered to be poor practice in the UK, and follows a year in which the company recognised exceptionally high gains for longstanding Executive Chairman Kevin Loosemore (GBP28.9m).
- J.P. Morgan Asset Management also voted against both the Remuneration Report and the Remuneration Policy at Future plc. We were concerned at the Remuneration Committee’s decision to use discretion to award maximum bonuses to the CEO and CFO (150% and 125% of salary respectively), when the initial maximum was capped at 95%. We were also concerned that the Committee resolved to make early payments “on account” to CEO Zillah Byng-Thorne and CFO Penny Ladkin-Brand, in order to allow them to participate in the rights issue. The company explained that allowing them to invest GBP 400,000 (in the case of Byng-Thorne) and GBP 160,000 (in the case of Ladkin-Brand) in company shares “further aligned their interests with shareholders”.
- J.P. Morgan Asset Management also opposed the re-election of three non-independent directors at Euromoney Institutional Investor plc. Kevin Beatty and Tim Collier are both serving executives at Daily Mail and General Trust (DMGT), which controls 49.04% of the company. A third director, Lorna Tilbian, is Head of the Media Sector of Numis Corporation, which is a broker to DMGT.
- In Europe, J.P. Morgan Asset Management voted against remuneration at Trigano SA. Following the enactment of the Sapin 2 Act, smaller French companies are now required to table binding ex-post votes on the compensation elements granted to executives and board members for the first time. The company's remuneration practices fall below market standards, particularly in relation to transparency of executive bonuses, individual disclosure of salaries, and the lack of a bonus cap or long-term incentive arrangements. Although receiving significant dissent, the resolutions passed with the support of the controlling Feuillet family, which owns 57% of the shares and 71.5% of the votes, thanks to double voting rights.
- In Spain, J.P. Morgan Asset Management opposed issuances of shares and convertible bonds without preemptive rights at Bankia. The resolutions allowed the company to increase its capital, in one or several stages, by up to 50%, without consulting the general meeting. The board was also empowered to exclude pre-emptive rights for existing shareholders. Although the issuance requests complied with local market best practice, our preference for lower limits for capital increases without pre-emptive rights, as stipulated in our own guidelines, was not met.
- Year-to-date, J.P. Morgan Asset Management has engaged with 58 companies in the UK and Europe on ESG issues (not counting scheduled one-to-one meetings). Of these, 13 were in-person meetings to discuss corporate governance issues at portfolio companies, 15 were consultations over remuneration arrangements, and 9 were in relation to social or environmental issues.
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