NILGOSC believes that, as a responsible investor, it has a legitimate interest in the management and corporate governance of the companies in which it invests and supports the use of voting as a means of expressing concern over environmental, social or governance (ESG) issues. By exercising its right to vote at company meetings, NILGOSC seeks to improve corporate behaviour and protect shareholder value, by maintaining effective shareholder oversight of directors and company policies, which is the process on which the current system of corporate governance depends.
NILGOSC expects the companies in which it invests to comply with ESG best practice and has developed a voting policy, which provides a basis for communicating with investee companies, and for holding directors accountable for the stewardship of the companies they manage. NILGOSC’s Voting Policy represents its view on what it believes are important elements of good corporate governance and the principles which will be used to determine voting decisions on specific issues.
How NILGOSC Votes
NILGOSC will exercise its voting rights, if possible, at all company meetings within its actively managed equity portfolios, and will vote against management where there are significant ESG failings.
NILGOSC believes that there should be no grey area when it comes to voting and have adopted a policy of not abstaining from votes to ensure that dissension from management recommendations is accurately recorded. Peak voting season runs from April to June, and stewardship activity is reported for the 12 months to 30 June each year.
NILGOSC has appointed a specialist corporate governance partner, Minerva Analytics Ltd (Minerva), to coordinate its corporate governance and voting activities. NILGOSC avails of Minerva’s research service to provide detailed information and financial analysis for each of its actively managed equity holdings, to help it make informed voting decisions in line with NILGOSC’s bespoke voting policy.
For passively managed equities, votes are cast by NILGOSC’s passive investment manager according to its own voting policies. The manager reports to NILGOSC on its voting activities on a quarterly basis.
While shareholder resolutions are rare at Annual General Meetings (AGMs) in Europe, they can provide an important tool for shareholders wishing to exact change at North American companies (due to the absence of a corporate governance code in that region) and are becoming increasingly common at AGMs in other markets.
Shareholder resolutions can be proposed on a range of issues including, but not restricted to: shareholders rights; compensation practices; environmental issues; human rights; and animal welfare.
NILGOSC believes that these resolutions should be approached on a case-by-case basis, taking into consideration both: whether the resolution is in line with NILGOSC policy; and whether it is appropriate to the circumstances at the targeted company. In determining appropriateness, the overriding principle is that NILGOSC will support those proposals which are compatible with NILGOSC policies and are in the best interests of shareholders.