Good corporate governance drives sustainable performance

While shareholders, at the prospect of pending dividend payments, are eagerly anticipating the AGM season, they will simultaneously have to decide how they will vote at the respective AGMs. The interview with David Diamond, Global Co-Head of ESG at Allianz Global Investors, gives an insight into how professional investors deal with voting their proxies.

 

While equity investors are looking forward to getting their dividends paid out, annual general meetings are busy times for active investors to vote their proxies. How do you manage the process at Allianz Global Investors?

 

David Diamond: As a long-term active investment manager, AllianzGI takes proxy voting very seriously. There is an important relationship between good corporate governance and sustainable performance. We are therefore proud to have agreed in 2013 among investment entities across AllianzGI an overarching global framework for proxy voting, which we consider to be in clients’ best interests.

 

 

So you centrally decide on how to vote on each proposal?

 

No, it is important to distinguish between guidelines, decision and execution. At a global level, we have established corporate governance guidelines which represent a set of policy principles and provide guidance for the implementation of our proxy voting activities. These were developed to provide AllianzGI investment companies with a comprehensive list of guidelines to determine how to vote proxies on behalf of clients.

 

All decision making on how we vote at each AGM and on each resolution resides with the investment entity and its shareholding on behalf of clients. Indeed, our guidelines allow proxy voting committees of different investment entities the discretion to decide on proxies in accordance with local laws, standards and client requirements, as appropriate, without influence either directly or indirectly by parent or affiliated companies.

 

 

How does this work in practice?

 

Our proxy voting committees have the ultimate responsibility to decide how to vote at an AGM. Our global corporate governance guidelines as a set of policy principles provide our committees with a framework for their discussions. On a day to day basis AllianzGI’s regional proxy voting officers have full oversight and responsibility for reviewing AGM agendas. Our proxy voting officers also liaise with our portfolio managers and analysts in order to substantiate the committees’ decision-making in case of doubt. Given the impracticality of voting in person at over 2300 AGMs worldwide, AllianzGI, like many other investment managers, delegates the execution of proxy voting to a third party service provider for reasons of efficiency.

 

 

There has been some talk about these kinds of service providers getting too powerful. Would you agree?

 

I can understand these concerns. But from an investor’s perspective you are free to decide if you make use of external resources and to which degree you empower them. We draw a very clear distinction line between the decision-making which rests with the regional proxy voting committees and the execution of the votes by our vendor.

 

 

Does AllianzGI always vote in the same way or is it possible that e.g. your European investment entity votes differently than another in Asia?

 

You mention our European entity which includes investment management operations in Frankfurt and quite recently after merging most legal entities also London and Paris. As a consequence, we have also reduced complexity in our proxy voting. Having guidelines doesn’t mean that we could not vote differently due to different backgrounds and clients across regions.

 

 

As an investor, am I able to see how you have voted?

 

We are transparent about our proxy voting guidelines and the voting itself and publish this information on a regular basis on the internet. At a global level we do an ex-post analysis on how we voted. In 2013 we abstained or voted against management at 45.4 percent of the 2381 AGMs, where we participated. We voted on over 26.000 resolutions and opposed management in 8.2 percent of cases. The types of resolutions garnering our highest levels of opposition include in descending order: creation of capital without preemptive rights; remuneration-related resolutions; and supervisory and director elections. Moreover, we supported over 307 out of 476 shareholder resolutions.

 

 

In your career you have followed ESG, corporate governance and proxy voting for over 12 years. Do you see certain trends, especially after the financial crisis?

 

Corporate Governance and ESG in a broader sense are receiving much more attention. People clearly see that there is a link between ownership and responsibility. Inadequate governance is much more under scrutiny than a decade ago resulting in overall higher standards and a kind of convergence of what is seen as good governance among international investors.

 

David Diamond, Global Co-Head of ESG at Allianz Global Investors
David Diamond, Global Co-Head of ESG at Allianz Global Investors

As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer:

 

Marc Savani
Allianz Global Investors Europe
Phone +49 69 24431-4206
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