UK Proxy Voting Policy
A Global Approach
There are common elements which underpin good corporate governance. Our principles build on these common elements and are formulated to embrace the different models that exist and apply these principles globally. As global equity investors, RCM also recognises international variations in corporate culture, accounting standards and requirements, regulatory environments, legal frameworks and voluntary disclosures.
UK Proxy Voting Policy
RCM’s UK proxy voting policy is directly informed by the National Association of Pension Funds (“NAPF”) approach to corporate governance and proxy voting as set out in its Guidelines (the “NAPF Guidelines”) dated November 2007.
The NAPF Guidelines have themselves been written in accordance with the Combined Code on Corporate Governance (the “Code”). The Code applies to all companies listed on the Main Market of the London Stock Exchange, irrespective of domicile.
Our view is that such an approach, although formulated in the UK, can be applied globally. The NAPF Guidelines also specifically acknowledge the importance of the work of the UK Pre-Emption Group in matters relevant to equity issuance generally and the rights of existing shareholders.
Our overall approach therefore rests on the UK corporate governance model (loosely referred to as the “comply or explain” model) but gives us the flexibility of scrutinising issues on a case by case basis where we believe that such an approach adds value for our clients.
RCM's commitment
RCM takes its obligation to exercise voting authority over shares in all its investment portfolios on a global basis very seriously.
We recognise that shareholder resolutions increasingly contain controversial issues involving, inter alia, shareholder rights, corporate governance and social and environmental concerns.
We believe that the exercise of proxy voting has an economic impact for our clients; it is therefore our fiduciary duty to cast votes in such a way that preserves and enhances the value of our client investments.
RCM’s corporate governance objectives are summarised as:
- Our primary aim is to maximise shareholder value by securing good corporate performance. We aim to protect this value by ensuring that our investee companies operate within the framework of the Code;
- We believe that the social and environmental consequences of corporate activity are increasingly important to some of our clients and are in any event important factors in determining the creation and maximisation of shareholder value over the long term. We can tailor our approach to suit the specific requirements of our clients; ordinarily we apply the NAPF Guidelines as our basic voting approach.
We have developed good coverage of the major markets around the world and have contracted with specialised outside service agencies to enable us to expand coverage in other markets where shareholder information is not readily available. RCM votes in all markets wherever possible (save where share-blocking is a local requirement), and makes every effort to encourage both improved levels of disclosure among companies and proper voting infrastructure among custodians and agents globally.
UK Proxy Voting Committee
The UK Proxy Voting Committee is responsible for formulating RCM’s approach to proxy voting for its UK client base. In addition to setting policy, the UK Proxy Voting Committee reviews specific corporate governance issues raised by our London based portfolio managers and instructs the casting of votes in relation to these issues. The UK Proxy Voting Committee works in tandem with RCM’s operations team, RiskMetrics (our appointed proxy voting agency) and custodians to ensure that our clients’ votes are cast accurately and in time. The UK Proxy Voting Committee maintains close contact with the Proxy Voting Committees in Europe, US and Asia Pacific to ensure consistency globally.
Corporate Governance Guidelines
Part 2 of this document sets out a summary of RCM’s Corporate Governance Guidelines which are largely drawn from the NAPF Guidelines. It must be emphasised that this summary is not intended to be exhaustive. Our approach is deliberately flexible in order to permit divergence from these guidelines where we believe it is in our clients’ best interests to do so.
RCM’s guidelines are reviewed on a regular basis and revised when the UK Proxy Committee determines that a change is appropriate or that the guidelines need to be supplemented to address a new issue. The guidelines set out our general approach to certain issues and are applied consistently for all clients save where a specific clients’ has requested that RCM applies a voting approach other than that endorsed by the NAPF.
It should be noted that whilst RCM ensures that its voting agent, RiskMetrics, casts all votes in accordance with our clients’ mandates, it is generally not practical or cost effective for us to scrutinise each proxy on an individual basis. Our approach to voting proxies is therefore to employ RiskMetrics to cast all routine and non-contentious proxies (principally routine shareholder resolutions to be proposed at Annual General Meetings or their overseas equivalent) in accordance with the NAPF Guidelines. RCM devotes its time and effort to the scrutiny of more contentious issues including all resolutions proposed at Extraordinary General Meetings of our investee companies. Responsibility for determining our approach with regard to a specific voting issue rests with the UK Proxy Voting Committee.
UK Proxy Voting Officer
The UK Proxy Voting Officer is responsible for chairing the UK Proxy Voting Committee, ensuring that RCM’s Voting Guidelines are in line with current best practice and acts as a link between portfolio managers, other RCM offices around the world, RiskMetrics and the RCM operations team.
Conflicts of Interest
RCM may have a conflict of interest that affects how it votes on behalf of a client. Irrespective of the specific issue, votes are only cast in the best interest of the client that ‘owns’ the vote. For this reason, RCM will not vote shares in one client’s account in a manner designed to benefit or accommodate any other client.
In order to ensure that all material conflicts of interest are addressed appropriately while carrying out its obligation to vote proxies, the UK Proxy Voting Committee is responsible for addressing how RCM resolves such material conflicts of interest with its clients.
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