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May 2020

Proxy voting

Voting rights are exercised systematically on all mutual funds managed by Pictet Asset Management's entities.

Proxy Voting Policy

Our voting policy is based on generally accepted standards of best practice in corporate governance including board compensation, executive remuneration, risk management, shareholder rights.

Long-term interests of shareholders are the paramount objective. We therefore do not always support the management of investee companies and may vote against management from time to time. To assist us in the exercising of proxy votes, Pictet Asset Management uses the services of third party specialists whose expertise and international experience allows us to vote at all relevant company meetings worldwide. Applicable voting guidelines can be found here:

International companies

US companies

In March 2019, we adapted our proxy voting guidelines for companies where the founder or a family is a major shareholder, i.e. controls more than 30% of the economic or voting rights. Such companies account for around 10% of our total holdings. For these companies, we apply a lower threshold for board independence to reflect the realities of their ownership structure. While typically we would require that a majority of board members be independent from management or reference shareholders, for family-controlled businesses we require that only 33% are independent (unless the requirement of the country where the company is listed is lower).

In February 2020, we adapted our proxy voting guidelines for Japanese companies with no female board members and we will vote “abstain” on male candidates to boards with no female directors. We believe that board diversity can lead to improved corporate governance and strategic oversight. It can also lead to greater innovation, better risk management and stronger connections with customers, employees and business partners. Therefore, we are keen to play our part in encouraging Japanese businesses in their progress towards more gender-balanced boards.

The following principles are used in defining the scope of accounts and securities eligible for proxy voting:

  1. For actively managed funds, we aim to vote on 100% of equity holdings.
  2. For passive strategies, we aim to vote on companies representing 80% by weight of underlying benchmarks. This target may be revised upwards or downwards for specific strategies depending on factors such as portfolio size, geography or market capitalization.
  3. For segregated accounts, including mandates and third-party (ie sub-advisory) mutual funds managed by Pictet Asset Management, clients who delegate the exercise of voting rights to us have the choice between Pictet Asset Management’s policy or their own voting policy. 

For portfolios delegated to third-party asset managers and external funds in which we invest on behalf of our client’s, we expect managers to exercise proxy voting per their own policy and report accordingly to relevant Pictet Asset Management entities.


Execution

Pictet Asset Management always reserves the right to deviate from third party voting recommendations on a case by case basis in order to act in the best interests of our clients. Such divergences may be initiated by Investment teams1 or by the ESG team and must be supported by written rationale.

In instances when consensus cannot be reached between the Investments teams and ESG team, the decision is escalated to relevant CIOs and, if necessary, the Head of Investments.

Proxy Voting Statistics 2019

A summary of Pictet Asset Management’s proxy voting statistics is set out below.

Meeting overview

In 2019 Pictet Asset Management voted at 3'489 general assembly meetings out of 4’069 votable meetings for active and passive equities. We voted “Against” (incl. “abstained” or “withhold”) to at least one resolution at 1’604 meetings and we did not vote at 580 meetings.

Breakdown of votable meetings – active & passive strategies 

Source: ISS; Pictet Asset Management – December 2019

For active equity strategies, we voted at 2’988 general assembly meetings out of 3’011 votable meetings corresponding to 99% of company meetings by number. We voted “Against” (incl. “abstained” or “withhold”) to at least one resolution at 1’391 meetings and we did not vote at 23 meetings.
Breakdown of votable meetings – active strategies

Source: ISS, Pictet Asset Management – December 2019

For passive equity strategies, we voted at 1’606 general assembly meetings out of 2’597 votable meet-ings. We voted “Against” (incl. “abstained” or “withhold”) to at least one resolution at 710 meetings and we did not vote at 991 meetings.

For passive strategies, we voted on 62% of company meetings by number, which is in line with our objective to vote at 80% of company meetings by weight of underlying benchmarks.

Breakdown of votable meetings – passive strategies
Breakdown of votable meetings passive strategies

Source: ISS, Pictet Asset Management – December 2019

Management resolutions

Out of 39’299 management resolutions we voted against management on 4’270 items (11%), supported management on 34’436 (88%) and voted “abstain” on 593 items (1%).

Breakdown of votable items
Breakdown of votable meetings active strategies

Source: ISS; Pictet Asset Management – December 2019

We voted against management on resolutions that relate primarily to director nominations or supervisory board matters (48%), non-salary compensation (20%), routine issues such as approval of reports, name changes, and technical bylaws among many others (15%) and capitalization including authorizations for stock issuances, stock splits, and conversions of securities (13%)

Breakdown of votes against management by proposal type (excluding shareholder resolutions)
Fig 3 Breakdown of votes against management by proposal type 2019

Source: ISS; Pictet Asset Management – December 2019

Shareholder resolutions

We supported 782 shareholder resolutions, ie 69% out of 1'131 proposals.

Breakdown shareholder resolutions

Source: ISS; Pictet Asset Management – December 2019

The main categories of shareholder resolutions that we supported are director related (47%), routine business such as requests for an independent board chairman (17%), and other resolutions related to corporate governance (13%).

Categories of shareholder resolutions that we supported

Source: ISS; Pictet Asset Management – December 2019

Deviation from voting guidelines

In 2019 we deviated from third-party recommendations on 347 resolutions. The main categories we deviated were related to director nominations (255 resolutions), routine resolutions such as election of remuneration committee member(s) or auditor ratification (36 resolutions) and non-salary compensation including shareholder approvals of compensation related matters (35 resolutions).

Breakdown of deviations from voting guidelines

Source: ISS; Pictet Asset Management – December 2019