LGS invests in a diverse range of companies on behalf of our members. These investments, or shares, entitle us and other shareholders to vote on various issues proposed by a company at the company’s annual general meeting or at a special meeting. If a shareholder can’t attend a meeting in person, they can elect to vote using a proxy ballot.
As LGS is committed to being an active owner on behalf of our members, we use these proxy ballots to vote on company proposals.
Examples of resolutions that might be voted on are the election of the board of directors, approval of executive remuneration plans, approval of capital raisings and risk management disclosure.
Proxy voting is an important mechanism that enables shareholders to influence a company’s operations, corporate governance and capital structure. Voting on company proposals forms an avenue for shareholders to provide signals to the Board about their satisfaction with governance processes and performance of the company.
The LGS Investment Committee oversees the proxy voting process, with day to day implementation managed by the investment team, specifically the Head of Sustainability and the Sustainability Officer.
LGS utilises the services of two proxy voting service providers. The Australian Council of Superannuation Investors (ACSI) provides advice for voting with our Australian shareholdings and CGI Glass Lewis for our international shareholdings. ACSI and CGI Glass Lewis voting recommendations are informed by the following guidelines which are reviewed on a regular basis:
The following principles and organisations also inform our proxy voting process:
When determining voting recommendations, our proxy voting advisors will take into account a broad range of factors including the materiality of the ESG issue, the context in which it arises and the size of the company. When contentious issues arise, our advisors will often consider how long the issue has been a concern, the history of any dialogue with the company on the particular issue, and whether or not any improvement in company behaviour has occurred.
The LGS Active Ownership Policy outlines the process we use when voting on investment related issues such as capital raisings and shareholder proposals. In the event that a company or shareholder proposal is related to an investment or commercial matter rather than a traditional corporate governance issue, LGS will engage with the investment manager holding those stocks to seek their recommendation. If a shareholder proposal covers climate change or ESG issues, LGS will consult our fund manager(s), ACSI and the company board’s recommendations before making a decision on whether or not to support the proposal. The significance of the ESG issue at hand will be balanced with the need to protect long-term shareholder value.
Does LGS vote at every annual meeting of companies in which it holds shares? Are there circumstances in which LGS abstains from voting?
LGS aims to vote for 100% of our investee company proposals. A rare situation that requires us to abstain from voting is when we are asked to ratify a private placement of shares in which our managers have participated.
LGS is committed to increasing the transparency and disclosure of how we invest our members’ contributions. The Australian Government’s Stronger Super reforms require superannuation funds to publish information on past voting practices. We have taken this one step further and are proactively disclosing our voting decisions before company meetings. By doing this we hope to engage our members and other stakeholders and raise member awareness about where their long-term savings are invested and how their rights as ultimate beneficiaries of the shares are being met.
In addition to proxy voting, we also engage with the companies we invest in through a variety of channels, including:
By engaging with our investee companies, we aim to increase awareness and understanding of current and future ESG issues, improve standards of governance and encourage greater disclosure. Examples of issues that are discussed with our investee companies include board diversity and independence, remuneration report recommendations and sustainability reporting disclosure.
If you have any further questions about proxy voting at LGS send us an email.