Aeon Proxy Voting Policy Outline
Aeon Investment Management follows the King IV code and principles outlined in the UNPRI when making decisions on votes on behalf of our clients. Any conflicting resolution is usually voted against if no sufficient justification is provided. Below is a summary of common resolutions Aeon Investment Management votes on and gives one an idea of our policies in this regard.
Aeon Investment Management considers it’s internally developed Social Responsible Investing Framework in its proxy voting policies. Inevitably most resolutions do not cover the SRI framework, and in this instance we interact and lobby company management directly on SRI and ESG relevant issues.
The King IV code recommends the board of directors comprise of a majority of independent non-executive directors. Aeon Investment Management therefore sets an independence threshold of roughly 60% when deciding on the re-election of directors. Should this threshold be breached, steps are taken to vote against any non-independent director up for re-election.
Directors perceived to be non-independent by Aeon Investment Management but classed as independent on the annual reports are voted against when up for re-election onto the board and/or committees. The criteria used in our independence assessment are tenure, financial interest in the company and relationships with other companies that may influence decisions. The King IV code recommends an independent director with a material financial interest in the company and/or tenure on the board greater than 9 years should undergo an independence assessment which should be presented in the company annual report. This requirement is strictly enforced in Aeon Investment Management’s voting policy.
Re-election of Directors
Aeon Investment Management encourages single resolutions for each director’s re-election and/or remuneration. We strongly discourage block resolutions for multiple re-elections or remuneration increases, as any conflict will result in us voting against the entire batch.
Attendance at board meetings and subcommittee meetings are a key consideration in our re-election decision. Unless there are valid reasons for not being able to attend, Aeon Investment Management will vote against the director’s re-election.
Aeon Investment Management also considers the number of external boards each director is on. If a director is on more than 3 boards we will investigate his attendance at each of the company’s board meetings. If the director has a poor attendance record for either company Aeon Investment Management will vote against the director’s re-election as the directors commitment to other companies may impair their decision making ability.
Proposed fee increases are evaluated alongside the company’s relative performance over the past years as well as the fees relative to their main competitors. Should the fee increases seem excessive compared to their performance and/or competitors’, Aeon Investment Management will vote against the resolution.
Share incentive packages should be fair to all company stakeholders. The package should contain explicit targets to ensure bonuses awarded are transparent to all stakeholders. Aeon Investment Management favours long term incentive packages to ensure interested parties objectives are in line with the long term sustainability of the company. If we find the package does not include a targeted criteria and/or explicit benchmark or is excessive, Aeon Investment Management will vote against the resolution. Common targets are EPS growth, ROCE, Economic profit growth, outperforming specified competitors, etc.
Once-off payments to parties are viewed in isolation. The justifications for the payment as well as the amounts are considered when making a decision. Aeon Investment Management does not consider payments to outgoing parties a justifiable explanation as fees/bonuses would have compensated the individual during their tenure.
Control over Issued/Unissued Shares
Aeon Investment Management will usually votes against placing unissued shares into the directors’ control when no specific reasons have been provided by management. This is to avoid dissolution of company holdings.
We do however vote in favour of allowing directors to buy-back shares if there is a large free float and/or no significant shareholders whom may benefit unfairly from the transactions.
Resolutions to re-elect auditors from reputable audit firms will usually be voted in favour of by Aeon Investment Management. If the proposed audit company is not considered reputable, Aeon Investment Management would vote against the resolution if there are no valid reasons provided for using the firm.
Adoption of Annual Financial Statements
Aeon Investment Management normally votes in favour of the adoption of the financial statements. This resolution would be voted against if we feel certain material information has been omitted from the annual report.
The King IV code, the UNPRI and mandate restrictions are collectively used to guide our decision making on resolutions not mentioned above. Aeon Investment Management also evaluates the resolution’s impact on the company and society when deciding on our stance. Should further information be required an effort is made to contact management for clarity.
In the case of internationally listed companies, we will also apply international codes of corporate governance, such as the UK Combined Code on Corporate Governance.
“For to be free is not merely to cast off one’s chains, but to live in a way that respects and enhances the freedom of others.” – Nelson Mandela