By Alan Porter, Fund Manager, Sanlam Investments


We believe voting by shareholders matters because it allows for scrutiny of a board’s actions. We see it as an effective governance tool that is becoming increasingly important today as investors step up their engagement related to environmental and social issues as well.
 
As managers of the Sanlam Sustainable Global Dividend Fund we vote, on behalf of our clients, on all items and proposals of the annual general meetings (AGMs) of all our holdings. We don’t necessarily vote in line with management or with voting advisors, we vote on a case-by-case basis on the merits of the proposals in front of us. In fact, at most AGMs, we vote against management on at least one proposal.
 
There are several recurring occasions when we vote against managements.
 
One is on the election of a director who is both chair and chief executive. Our belief is that the CEO runs the company while the chair leads the board’s oversight of the executive. In addition, we think having two leaders reduces risks in times of crisis, complexity, and increased regulation. We think the roles should be split. If a board member, outside of the chef executive and chief financial officer, is not independent we will vote against their election.
 
We also vote against the election of whole boards for several reasons. One is if the board is entrenched. We consider a board entrenched when a significant proportion of directors have been on the board for longer than 15 years or are aged over 70 years or a combination of the two. Another is if the board is not diverse enough, say if less than 30% of directors are female.
 
Remuneration is another key AGM issue for us. Most AGMs ask for shareholders to approve executive remuneration. We won’t approve excessive remuneration packages. We won’t approve pay linked to financial targets that aren’t stretching. We won’t approve pay that has no link to sustainability metrics.
 
When we vote against management proposals, we let the company know why we have voted the way we have. This naturally leads, in most cases, to engagement and we can then further assess the responses we are given. Therefore, voting matters.  
 

Alan Porter
Senior Fund Manager

Fund risks
The Fund has holdings which are denominated in currencies other than sterling and may be affected by movements in exchange rates. Consequently the value of an investment may rise or fall in line with the exchange rates.

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