international corporate governance report governance voting... · this is our first international...

© Ecclesiastical Insurance Office plc 2011

International Corporate Governance ReportProxy Voting Report Quarter to 30th June 2011

For All resolutions

© Ecclesiastical Insurance Office plc 2011 2

Key Events: Quarter to 30th June 2011

This is our first international corporate governance voting report following the appointment

of Glass Lewis & Co. on 1 April as our strategic partner for the execution of global (ex-UK)

ballots. We will seek to apply the principles of best corporate governance practice in each

overseas market and we will oppose or abstain proposals that fail to reflect this

In the EU, share blocking is being eliminated with the EU Shareholders’ Rights Directive

coming into force. At companies that continue to apply share blocking, we will usually take

no action rather than waive our shareholder rights

President Obama’s signing into law the Dodd-Frank Act in the US will make the 2011 proxy

season a momentous one for shareholders, as they will be given “access” rights for the first

time, including a vote on executive compensation (“say on pay”) at least every three years;

we will support an annual shareholder vote on remuneration, and reject triennial mandates

Should pay be linked to sustainability? Recent research has found that 29% of companies

in six key indices (including the CAC40, DAX30, S&P100 and FTSE50) make a link

between pay and sustainability – but this varies between as much as 60% of Australian

companies versus 17% of German ones. 69% of utility companies make the link compared

with only 13% in the IT sector

http://www.glasslewis.com/


Key Events: Quarter to 30th June 2011

Votes against resolutions at French company meetings among the CAC40 rose to an

average of 6.3% in 2010 from 5.9% in 2009, whilst the number of resolutions not adopted

reached 64 suggesting a sharpening of shareholder activity. The most contentious issues

were executive compensation, free stock options and the election of Executive Presidents

The 2011 US proxy voting season has so far seen activist shareholders lodge in excess of

350 shareholder resolutions, with environmental issues accounting for 26%, human rights

and labour issues 12%, diversity issues 23% and political spending 23%. SRI investors are

the largest category of filer, followed by pension funds. In 2010 just 2 of 182 proposals that

went to a vote attracted over 50% support (Layne Christensen and Massey Energy), with a

further 15 attracting more than 40% support

Swiss pharmaceutical company, Novartis, saw 40% oppose the remuneration report on the

first occasion shareholders were allowed to vote on it; an activist campaign was opposing

the CHF 25m package awarded to the Chairman and CHF 13m to the CEO

Proposals to be introduced from 1 July in Australia will see shareholders given more scope

to remove directors where the remuneration report receives over 25% opposition two years

in succession; the vote on pay will remain advisory, however


International Proxy Voting: Quarter to 30th June 2011

For Oppose Abstain Total

Resolutions 1,162 187 26 1,375

% 84 14 2 100

Meetings 115

Shareblocking - - - 5

Reason for Action Oppose Abstain

Executive Compensation 23 3

Board Balance (Directors) 83 2

Shareholder Capital Issues 62 4

Other 19 17

Proxy voting statistics relate to all Ecclesiastical funds under management, institutional and retail, and therefore may include companies excluded on

ethical grounds in the Amity Funds, but allowed in other Funds. At companies where shareblocking is exercised, such as in Switzerland and Norway,

EIM’s policy is to take no action rather than waive our shareholder rights

Meetings by

Region

No.

Europe (EU)1 47

Europe - Other -

USA 7

HK/Singapore 50

Japan 5

Asia – Other 5

Australia/NZ 1

Emerging 2 -

Total 115

1 ex-UK (see separate voting report)

2 Latin America/India/Africa


Detailed Voting Report: Quarter to 30th June 2011

Oppose Votes

Company Date* Resolution Reason

Akzo Nobel NV 27.04.11 11 Elect Ms P Bruzelius Serves on too many Boards; time commitment

Atlantia 20.04.11 3 Amend 2009 ESOP Discretion too wide to alter plan terms

4 Long-term Incentive Plans Poor plan terms; not in shareholder interests

Banco Santander 26.04.11 3 Election of Directors Bundled proposal; not in shareholder interests

Capita Commercial Trust 28.04.11 6 Transaction of Other Business Granting of unfettered authority to Board

China Merchants Holdings 28.04.11 3 Elect Mr D Xue Bo Beneficial owner on Audit Committee

DBS Group Holdings Ltd. 28.04.11 5 Director’s Fees Fees viewed as excessive compared to peers

9 Elect Mr C Wai Chee Serves on too many Boards; time commitment

11 Share Option Plans Poor plan terms; not in shareholder interests

Dream International 29.04.11 6 Elect Mr Y Cheong Heon Less than 75% attendance; time commitment

10 Issue Shares No Pre-emption Not in best interests of shareholders

12 Issue Re-purchased Shares Not in best interests of shareholders

Ezion Holdings 28.04.11 9 Share Option Plans Insufficient disclosure to form a view

Gas Natural SDG 14.04.11 17 Approve Remuneration Report Insufficient disclosure to form a view

* Date throughout refers to the date of company meeting; all proxies were voted within the calendar quarter


Oppose Votes (2)

Company Date Resolution Reason

Gettinge AB 27.04.11 19 Compensation Guidelines Compensation policy reflects poor value

Hana Microelectronics Public Co. 29.04.11 12 Transaction of Other Business Granting of unfettered authority to Board

Hi-P International 25.04.11 3 Elect Mr Y Tiong Eng Beneficial owner on Audit Committee

Imerys 28.04.11 7 Supplementary Benefits Individual benefits not in shareholder interests

9 Elect Mr A Langlois-Meurinne Chairs Nomination Committee; combined roles

11 Elect Mr A Cardoso Serves on too many Boards; time commitment

16 Authority to Issue Shares Exceeds limit; not in shareholder interests



19 Authority to Set Offering Price Potential dilution; not in shareholder interests

20 Authority to Increase Capital Potential dilution; not in shareholder interests

25 Grant Stock Options Performance metrics not disclosed

26 Re-issue Restricted Shares Performance metrics not disclosed

27 Authority to Issue Warrants Performance metrics not disclosed

Krung Thai Bank Public Co.Ltd 22.04.11 13 Transaction of Other Business Granting of unfettered authority to Board

KS Energy Services Ltd. 28.04.11 3 Elect Mr L Ho Seng Connected director on Audit Committee


M1 Ltd. 07.04.11 4 Elect Mr C Kok Kee Serves on too many Boards; time commitment


Oppose Votes (3)


7 Elect Mr R Thein Connected director on Audit Committee

Munich Re 20.04.11 10 Compensation Policy Insufficient disclosure to form a view

Noble Group Ltd. 29.04.11 4 Elect Mr R Leiman Connected director on Compensation Committee

19 Performance Share Plan Poor plan terms; not in shareholder interests

20 Amend Articles On balance, not in shareholder interests

Oversea-chinese Banking Corp. 15.04.11 5 Elect Mr C Choong Kong Connected director on Compensation Committee

6 Elect Mr L Tih Shih Connected director on Compensation Committee

Pfizer 28.04.11 15 Advisory on Compensation Excessive severance; plan/performance terms

17 Publish Political Donations Shareholder proposal; not viewed as best practice

18 Publish Lobbying Report Shareholder proposal; not viewed as best practice

19 Publish Price Restraints Shareholder proposal; not viewed as best practice

21 Call a Special Meeting Shareholder proposal; not viewed as best practice

22 Publish Animal Research Shareholder proposal; not viewed as best practice

Sembcorp Marine Ltd. 20.04.11 3 Elect Mr A Haridass Connected director; related party transactions

5 Elect Mr R Hale Beneficial owner on Audit Committee


Sound Global Ltd. 30.04.11 4 Elect Mr W Yibo Less than 75% attendance; time commitment

5 Elect Mr F Tao Less than 75% attendance; time commitment


Oppose Votes (4)


Suntec Real Estate IT 15.04.11 9 Transaction of Other Business Granting of unfettered authority to Board

Super Group Ltd. 28.04.11 3 Elect Mr T Kok Chiew Connected director on Compensation Committee

8 Elect Mr G Boon Kok Executive director on Audit Committee

Super Group Ltd (EGM) 28.04.11 1 Adopt Group Share Scheme Poor plan terms; not in shareholder interests

United Overseas Bank Ltd. 29.04.11 4 Fees to Mr W Cho Yaw Individual benefits not in shareholder interests

9 Elect Mr T Lip-Bu Serves on too many Boards; time commitment

10 Elect Mr W Cho Yaw Serves on too many Boards; time commitment

13 Elect Mr R Thein Serves on too many Boards; time commitment

Venture Corporation Ltd. 28.04.11 6 Elect Mr C V R Wong Connected director on Audit Committee

Vivendi 21.04.11 9 Elect Mr H Lachmann Served on Audit Committee during fraud activity

Cap Gemini 26.05.11 13 Authority to Grant Warrants Lack of performance targets

Credit Agricole 18.05.11 16 Elect Mr M Michaut Connected director on a committee

20 Amend Loyalty Dividends Discriminatory; rewards long-term investors

22 Authority to Issue Shares Dilution exceeds recommended threshold


24 Authority Increase Share Limit Dilution exceeds recommended threshold

25 Authority Increase Capital Dilution exceeds recommended threshold

26 Authority to Set Offering Price Dilution exceeds recommended threshold


Oppose Votes (5)


32 Authority Issue Restricted Share Lack of performance metrics

Mersen 19.05.11 18 Authority Issue Restricted Share Lack of performance metrics

20 Warrants; Takeover Defence Anti-takeover defence mechanism

Sanofi- Aventis 06.05.11 13 Elect Mr G Van Kemmel Awarded excessive compensation to Chairman


20 Authority Increase Capital Dilution exceeds recommended threshold

21 Authority Share Issuance Limit Dilution exceeds recommended threshold

Societe Generale 24.05.11 9 Elect Mr A Wyand Chairman Audit Committee; risk deficiencies

10 Elect Mr J-M Folz Chairman Nomination Committee; combined roles

Suez Environnememt Company 19.05.11 10 Co-opt Ms P Chalmers-Small Board insufficiently independent

13 Elect Mr J-F Cirelli Board insufficiently independent

15 Elect Mr G Lamarche Audit Committee member; not independent

Deutsche Bank 26.05.11 7 Supervisory Board Acts No remuneration policy vote

8 Appointment of Auditor Auditor admitted to illegal activity

China CITIC Bank Corp. 26.05.11 9 Elect Mr T Guoli Board insufficiently independent

China Mobile 19.05.11 7 Elect Mr X Long Board insufficiently independent




Oppose Votes (6)


China Oilfield Services 23.05.11 8 Issue Shares No Pre-emption Not in best interests of shareholders

China Oriental Group 16.05.11 7 Elect Mr V Bhatnagar Board insufficiently independent

8 Elect Mr F W Man Chung Authorised ex-gratia payments to non-executives


13 Issue Re-purchased shares Not in best interests of shareholders

China Petroleum & Chemical 13.05.11 12 Issue Shares No Pre-emption Not in best interests of shareholders

China Shineway Pharmaceutical 31.05.11 11 Issue Shares No Pre-emption Not in best interests of shareholders


China Taiping Insurance 31.05.11 4 Elect Mr K N Yu Lam Non independent; on compensation committee

6 Elect Mr L Tao Board insufficiently independent

7 Elect Mr W Jiesi Time concerns; director serves on too many boards



CNOOC 27.05.11 6 Elect Mr L Fanrong Non independent; on compensation committee



Comba Telecom Systems 23.05.11 8 Elect Mr Y Ji Ci Board insufficiently independent



Oppose Votes (7)



15 Refresh Share Option Scheme Not in best interests of shareholders

Dah Chong Hong Holdings 11.05.11 6 Elect Mr G Smith Board insufficiently independent

7 Elect Mr K M Leung Board insufficiently independent



Dah Sing Banking Group 27.05.11 5 Elect Mr D W Hon-Hing Non independent; on compensation committee


Hop Fung Group Holdings 23.05.11 12 Issue Shares No Pre-emption Not in best interests of shareholders


Huaneng Power International 17.05.11 17 Elect Mr L Guoyue Non independent; on compensation committee

18 Elect Ms F Xiaxia Non independent; on nominations committee

24 Elect Mr W Liansheng Chairman Audit Committee; poor disclosure issues

Lerado Group Holding 31.05.11 10 Issue Shares No Pre-emption Not in best interests of shareholders


Li & Fung 18.05.11 5 Elect Mr W F Kwok Lun Time concerns; director serves on too many boards




Oppose Votes (8)


Lonking Holdings 20.05.11 11 Elect Mr N N Ying Board insufficiently independent



Minth Group 18.05.11 7 Elect Mr Y Zheng Board insufficiently independent



PetroChina Co. 18.05.11 18 Elect Mr F Bernabe Chairman Audit Committee; poor disclosure issues

22 Elect Mr C Ming Non independent; on compensation committee

24 Elect Mr W Qingshan Non independent; on compensation committee


Scud Group 11.05.11 6 Elect Mr L Yu Time concerns; director serves on too many boards



TCL Multimedia Technology 09.05.11 7 Elect Mr Y Guanghui Less than 75% attendance; time concerns

8 Elect Mr L Y Wing Less than 75% attendance; time concerns

9 Elect Mr T Guliang Less than 75% attendance; time concerns

10 Elect Mr H Xubin Less than 75% attendance; time concerns

11 Elect Mr A Da Rosa Jr Board insufficiently independent


Oppose Votes (9)




CRH 04.05.11 6 Elect Mr U-H Felcht Less than 75% attendance; time concerns

20 Meeting Notice of 14 Days Potentially disenfranchises shareholders

Irish Life & Permanent Group 18.05.11 6 Elect Mr R Keenan Member Audit Committee; improper loans made

11 Elect Mr P Ryan Connected director on Audit Committee

16 Meeting Notice of 14 Days Potentially disenfranchises shareholders

Smurfitt Kappa Group 06.05.11 11 Meeting Notice of 14 Days Potentially disenfranchises shareholders

Fugro 10.05.11 12 Issue Shares with Pre-emption Protective preference shares

Portugal Telecom 06.05.11 13 Remuneration Report Absence of any long-term incentives

14 Election of Directors Bundled resolution; insufficient independence

Telefonica 18.05.11 8 Elect Mr I F Casas Time concerns; director serves on too many boards

14 Elect Mr A F Herrero Time concerns; director serves on too many boards

Southern Company 25.05.11 6 Coal Combustion Waste Shareholder proposal; unreasonable cost burden

Xerox Corporation 26.05.11 7 Elect Mr N J Nicholas Jr. Failure to align pay with performance; RC member

8 Elect Mr C Prince Citigroup director during losses; taint by association

9 Elect Ms A Reece Merrill Lynch director during losses; tainted director

12 Remuneration Report Failure to align pay with performance


Oppose Votes (10)


Catlin 12.05.11 2 Director’s Remuneration Compensation policy presents poor value

Sigma Pharmaceuticals 08.06.11 5 Approve ESOS Inappropriate share price performance hurdle

8 Equity Grant CEO Inappropriate share price performance hurdle

Alstom 28.06.11 8 Elect Ms C Beinecke Provides legal services to company; not independent

Carrefour 21.06.11 10 Elect Mr B Arnault Time concerns; director serves on too many boards

13 Elect Mr A de Seze Time concerns; director serves on too many boards

Compagnie de Saint Gobain 09.06.11 10 Elect Mr G Mestrallet Time concerns; director serves on too many boards

18 Authority Increase Capital Not in best interests of shareholders

20 Takeover Defence; Warrants Serves as an anti-takeover device

Environment SA 23.06.11 9 Elect Mr F Gourdon Chairman – no Board committees established

13 Issue Re-purchase Shares May serve as an anti-takeover device

Anhui Tianda Oil Pipe Company 01.06.11 12 Elect Mr D Hornet Board insufficiently independent

13 Elect Mr G W Long Board insufficiently independent

15 Authority to Issue Shares Not in best interests of shareholders

BYD Electronic (International) 10.06.11 5 Elect Mr C Y Tong Time concerns; director serves on too many boards

8 Issue Shares w/o Preemption Potential dilution exceeds threshold

10 Issue Re-purchased Shares Potential dilution exceeds threshold

Huadian Power International 08.06.11 2 Issue Shares w/o Preemption Potential dilution exceeds threshold


Oppose Votes (11)


26 Elect Mr P Xingyu Board insufficiently independent

Sony Corporation 28.06.11 8 Elect Mr R Yasuda Time concerns; director serves on too many boards

Malayan Banking (EGM) 13.06.11 1 Employee Share Options Not in shareholder interests; no performance hurdles

2 Equity Grant Mr Omar Poor performance and vesting hurdles

Banco Santander Hispano 17.06.11 7 Elect Mr A Bernheim Time concerns; director serves on too many boards

Amada Co. Ltd 29.06.11 3 Elect Mr M Okamoto Board insufficiently independent

Sumitomo Mitsui Financial Group 29.06.11 13 Elect Mr J Mizoguchi Board insufficiently independent

14 Elect Mr S Kawaguchi Board insufficiently independent

Francotyp-Postalia Holding 30.06.11 10 Appointment of Auditor Non-audit fees greatly in excess of audit fee

11 Issue Convertible Debt Potential dilution; exceeds threshold

12 Increase Authorised Capital Potential dilution; exceeds threshold


Detailed Voting Report: Quarter to 30th June 2011

Abstain Votes


Ezion Holdings 28.04.11 2 Allocation of Profit/Dividend Poor disclosure surrounding low payout ratio

6 Appointment of Auditor Repeated failure to disclose audit fees

Hana Microelectronics 29.04.11 11 Amend Articles Insufficient disclosure to form a view

KS Energy Services Ltd. 28.04.11 5 Appointment of Auditor Repeated failure to disclose audit fees

Hi-P International 25.04.11 8 Appointment of Auditor Repeated failure to disclose audit fees

M1 Ltd 07.04.11 9 Appointment of Auditor Repeated failure to disclose audit fees

Noble Group Ltd. 29.04.11 7 Appointment of Auditor Repeated failure to disclose audit fees

Oversea-chinese Banking Corp 15.04.11 17 Issue Preferred Shares Insufficient disclosure to form a view

Super Group Ltd. 28.04.11 11 Appointment of Auditor Repeated failure to disclose audit fees

United Overseas Bank Ltd. 29.04.11 19 Issue Preferred Shares Insufficient disclosure to form a view

Venture Corporation Ltd. 28.04.11 8 Appointment of Auditor Repeated failure to disclose audit fees

Dah Sing Banking Group 27.05.11 10 Appointment of Auditor Repeated failure to disclose audit fees

Huaneng Power International 17.05.11 8 Appointment of Auditor Repeated failure to disclose audit fees

PetroChina 18.05.11 7 Appointment of Auditor Repeated failure to disclose audit fees

10 Elect Mr W Yilin Insufficient attendance at meetings


Abstain Votes (2)


Irish Life & Permanent Group 18.05.11 2 Director’s Remuneration Report Remuneration Policy not disclosed

Trasmissione Elettricita RN 12.05.11 11 Director’s Fees Insufficient information to take a view

13 Statutory List 30% of Equity Insufficiently independent

15 Appointment of Auditor Repeated failure to disclose audit fees

Asian Plantations 09.05.11 5 Director’s Fees Insufficient information to take a view

6 Authority to Issue Shares Insufficient information provided by the company

KS Energy Services (EGM) 25.05.11 1 Investment by Itochu Insufficient transaction information provided

Southern Company Inc 25.05.11 1.8 Elect Mr D James Served on Wachovia Risk Committee up to collapse

Anhui Tianda Oil Pipe Co. 01.06.11 6 Appointment of Auditor Failure to disclose breakdown of audit/non-audit fees

Pelikan International Corp. 20.06.11 2 Allocation of Profit/Dividend Insufficient justification for low payout ratio

Francotyp-Postalia Holding 30.06.11 6 Ratify Supervisory Board Acts Ongoing legal dispute; not in shareholder interests


The following votes were registered in support of management

Company Country Date Resolutions Action

Bayer AG Germany 21.04.11 7 For All Resolutions

Cache Logistics Trust Singapore 12.04.11 3 For All Resolutions

Carl Zeiss Meditec Germany 12.04.11 18 For All Resolutions

China Oriental Group (EGM) Hong Kong 27.04.11 1 For Resolution

DBS Group Holdings Ltd Singapore 28.04.11 1 For Resolution

Ericsson Telephone AB Sweden 13.04.11 23 For All Resolutions

HI-P International (EGM) Singapore 25.04.11 4 For All Resolutions

Koninklijke DSM NV Netherlands 28.04.11 13 For All Resolutions

Oversea Chinese Banking Corp. (EGM) Singapore 15.04.11 2 For All Resolutions

Petroleo Brasileiro SA US/Brazil 28.04.11 2 For All Resolutions

United Overseas Bank Ltd (EGM) Singapore 29.04.11 1 For Resolution

Venture Corporation Ltd. (EGM) Singapore 28.04.11 2 For All Resolutions

Wolters Kluwers NV Netherlands 27.04.11 11 For All Resolutions

Allianz Germany 04.05.11 7 For All Resolutions

BASF Germany 06.05.11 8 For All Resolutions

China Oilfield Services (EGM) Hong Kong 23.05.11 1 For Resolution

Comba Telecom Systems Holdings (EGM) Hong Kong 23.05.11 1 For Resolution

APPENDIX I


Company Country Date Resolutions Action

Deutsche Post Germany 25.05.11 10 For All Resolutions

Deutsche TeleKom Germany 12.05.11 26 For All Resolutions

E.On Germany 05.05.11 14 For All Resolutions

Hannover Rueckversicherungs Germany 03.05.11 11 For All Resolutions

Husqvarna Sweden 04.05.11 14 For All Resolutions

Merck & Co. USA 24.05.11 20 For All Resolutions

Ordina Netherlands 11.05.11 9 For All Resolutions

Waters Corp. USA 10.05.11 12 For All Resolutions

A2A Italy 15.06.11 3 For All Resolutions

Nine Dragons Paper (Holdings) Hong Kong 27.06.11 5 For All Resolutions

France Telecom France 07.06.11 23 For All Resolutions

TV Asahi Corp. Japan 28.06.11 21 For All Resolutions

KNM Group Berhad Malaysia 29.06.11 8 For All Resolutions

Sekisui Jushi Corporation Japan 29.06.11 10 For All Resolutions

APPENDIX I


US Shareholder Resolutions supported

Company Resolution Date

Pfizer Shareholder Rights: the right to act by written consent outside of the AGM 28.04.11

APPENDIX II

It is EIM’s policy to support US Shareholder Resolutions where these appear reasonable and proportionate and in keeping with our

general stance on ESG (environmental, social and governance) positives. Where they appear to mandate an unreasonable financial

charge or represent narrow lobby interests we may exercise discretion to oppose or abstain

APPENDIX III

Shareblocked Meetings

Company Country Date

Tessendeerlo Chemie Belgium 11.05.11

EDB Ergo Group Norway 24.05.11

Statoil Norway 19.05.11

Yara International Norway 10.05.11

Tessendeerlo Chemie Belgium 07.06.11


Graphical Analysis of Action Taken: Quarter to 30th June

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