Governance standards among countries exhibit a "stark disparity," while compensation-related proposals are the most contentious everywhere, according to Allianz Global Investors' voting record for 2019.
AllianzGI participated in 9,532 shareholder meetings in 2019. The analysis of its voting records on nearly 100,000 shareholder and management proposals found that the U.K. led the way on corporate governance standards for the third consecutive year.
Compensation related proposals continued to be the most contentious area globally, with AllianzGI voting against 48% of them, compared to 52% in 2018. Many of the votes stemmed from insufficient alignment between management and shareholders as expressed through weak links between pay and performance, along with incentive schemes not correlated to key business value drivers.
In the U.S., AllianzGI voted against management recommendations on compensation issues 70% of the time and abstained 8% of the time. "We maintained our conviction that pay design in the U.S. is suboptimal," the company said in its analysis. "We engaged companies heavily on improving pay design during 2019 but all too often found that our urgency for reform (better aligning pay with long-term performance) is not shared by other shareholders."
Its concerns include the use of stock options, variable compensation that rewards for underperformance and insufficient disclosure of pay design, along with short term equity schemes, termination agreements and severance provisions that allow for excessive payouts.
"Overall, there is a systemic problem of executive pay that has risen above inflation for many years. The growing discrepancy between the value being awarded to executives vs. employees and shareholders is noteworthy," the voting report said.
AllianzGI strongly supported numerous ESG shareholder resolutions, such as those calling for reporting on climate related policies and actions, green house gas emissions, carbon emissions reduction targets, and business risk and impact analysis. The firm supported 100% of all items relating to climate change, which typically related to increased levels of reporting and risk assessment in relation to mitigation of emissions and adaptation to physical impacts, and found last year's resolutions less prescriptive than in previous years.
Shareholder proposals aimed at improving corporate governance practices and enhancing shareholder rights included calls for an independent board chairman, majority voting for director elections, elimination of differential ownership and control structures, share-retention policies for executive directors and reduced ownership thresholds for shareholders to call a special meeting.
On social issues, AllianzGI supported proposals seeking transparency of political contributions and lobbying payments and policy, reporting on workforce diversity and gender pay gap and other human rights issues.
