Important Information
This communication contains certain information as to the voting intentions of Candriam acting as investment management company for and on behalf of collective investment schemes and discretionary portfolio management mandates. Candriam ‘s voting intentions result from internal and independent decisions and the votes will be cast in compliance with Candriam Proxy Voting Policy, available on Candriam website, or in compliance with the clients’ policy for certain mandates, as the case may be.
The opinions, analysis and views expressed in this document are provided for information purposes only and are not intended to recommend to the investor how to exercise his voting rights. Nothing herein constitutes an offer to buy or sell financial instruments, nor does it represent an investment recommendation or confirm any kind of transaction.
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Candriam purposefully published its voting intention for the resolutions below only. The publication of the information below does not prefigure anything about Candriam’s voting intentions on other resolutions submitted to the general assembly meeting.
Information disclosed is subject to change without notice.
Candriam engages in securities lending programs for some portfolios which are included in the Candriam voting perimeter. For the purposes of exercising the voting at the shareholders” meetings listed on this page, a recall of all of the related shares lent has been requested and performed, when materially feasible. More details are available in our voting policy
No assumption shall be made or reliance placed on the number of votes that will be cast.
| Company Name | Pre-declaration Trigger |
| AENA SME SA | Say-on-Climate |
| Apple, Inc. | Specific Shareholder Resolution Co-filing and/or Support |
| Banca Mediolanum SpA | Specific Shareholder Resolution Co-filing and/or Support |
| BFF Bank SpA | Previous/Ongoing Engagement Related |
| Danone SA | ESG Metric in Executive Remuneration |
| EDP - Energias de Potugal, SA | Say-on-Climate |
| Ferrovial SE | Say-on-Climate |
| GEA Group AG | Say-on-Climate |
| Gecina SA | Say-on-Climate |
| Icade | Say-on-Climate & Say-on-Biodiversity |
| Nestle SA | Specific Shareholder Resolution Co-filing and/or Support |
| Starbucks Corporation | Presence of an ESG Controversy |
| Stellantis NV | ESG Metric in Executive Remuneration |
| Unilever PLC | Say-on-Climate |
| Woodside Energy Group Ltd | Say-on-Climate |
Candriam is convinced that sound corporate governance practices deliver long-term shareholder value and pursues an active voting policy on behalf of its clients and as UNPRI signatory, it seeks to be an informed and proactive owner.
Candriam considers directors and management teams should be held accountable to shareholders.
As a responsible investor, we seek to ensure that our investee companies have implemented a holistic approach to their strategy, which takes into account the relevant risks and opportunities from both a financial and extra-financial standpoint.
Starting from 2022, Candriam decided to pre-announce some of its voting intentions ahead of the related general meetings when such pre-declaration may answer to stakehoders’ demand of improved transparency, serve an engagement objective or as an escalation measure.
Any pre-declaration will request first approval of our Proxy Voting Committee.
More details about our Engagement Policy can be found under Candriam public website.
Date of publication - 12 April 2024
Pre-declaration Trigger: Say-on-Climate
Meeting: 18 April 2024
Summary of Resolution: 9 : Advisory Vote on Company's 2023 Updated Report on Climate Action Plan
Candriam's Vote Intention: AGAINST (against management recommendation)
Rationale: We believe that Aena's Climate Action Plan is lacking in meeting several fundamental criteria. There is an absence of short and medium-term GHG targets encompassing scope 1, 2, and relevant scope 3 emissions, and the commitment to achieving net zero emissions by 2050 or earlier, addressing all material GHG emissions (scope 1, 2, and relevant scope 3) is unclear. Aena's climate plan outlines a target for achieving carbon neutrality in scopes 1 and 2 by 2030, with a GHG reduction goal of 93%, supplemented by a 7% offset.
However, the company has yet to establish a reduction target for scope 3 emissions, whereas these emissions constitute 99% of the company's total emissions. We do acknowledge that current targets for scopes 1 and 2 emissions until 2030 are progressing as planned. But considering the above, this is not sufficient for Candriam to support Aena’s climate plan.
We already expressed our discontent in the last couple of years by consistently voting Against the Climate Plan for the same reasons. Moreover, we also note that the Against vote proportion has only increased since the first SOC in 2020. Therefore, we expect Aena to take investors' feedback into account and to reinforce its climate strategy as soon as possible.
Date of publication - 16 February 2024
Pre-declaration Trigger: Specific Shareholder Resolution Co-filing and/or Support
Meeting: 28 February 2024
Summary of Resolution: Item 7 – Report on Use of Artificial Intelligence
Candriam's Vote Intention: for (against management recommendation)
Rationale: At Candriam, we believe that technology companies should be as transparent as possible to guarantee the safe use of rapidly evolving technologies such as Artificial Intelligence. The demand formulated by this resolution is aligned with this view.
As regulation appears, on average, several years after new developments it is essential for technology firms to display the highest standard in ethical practices in these early stages of deployment. Artificial Intelligence comes along with the probability of introducing biases, discriminations, misinformation, and other misuses and abuses against employees, users and society at large. We know that companies that can best avoid these issues are those that are the most transparent, accountable, and open to engaging with outside stakeholders such as civil society, academia, investors, etc. The terms ‘trustworthy AI’, ‘explainable AI’ are often used when referring to ethical practices. Our discussions on AI-related issues with technology companies has taught us that those companies that are the most transparent and open about the way they develop and deploy AI algorithms are also those that display the best ethical practices. While Apple’s existing guidelines and practices broadly address the social topics mentioned in the proposal, they do not specifically refer to the adverse impacts that AI could generate. Furthermore, certain of the company's peers have committed to mitigate risks posed by AI.
By being transparent on their AI principles, guidelines and processes, technology leaders, such as Apple, can also set a high standard for an ethical use of AI for the whole industry.
As such, we vote FOR this shareholder proposal.
Date of publication - 5 April 2024
Pre-declaration Trigger: Specific Shareholder Resolution Co-filing and/or Support
Meeting: 18 April 2024
Summary of Resolution: Item 5.3.2 - Slate 2 Submitted by Institutional Investors (Assogestioni)
Candriam's Vote Intention: FOR (against management recommendation)
Rationale: As co-filers of this resolution, we endorse the slate put forward by Assogestioni as we believe that the nominees could be the best positioned to represent the interests of minority shareholders and carry out an effective oversight on the management's behaviour.
Candidates on this list have agreed to adhere to the chart of corporate governance principles adopted by Assogestioni.
Date of publication - 5 April 2024
Pre-declaration Trigger: Previous/Ongoing Engagement Related
Meeting: 18 April 2024
Summary of Resolution: Item 3 – Approve Remuneration Policy
Candriam's Vote Intention: FOR (aligned with management recommendation)
Rationale: Since 2021, we've engaged in multiple discussions with the company to express our concerns regarding transparency and alignment with industry best practices. While some of these concerns were addressed in 2022 and 2023, the company's remuneration policy and disclosure practices still fall short of expectations.
This sentiment is shared by other investors, as evidenced by the high level of dissent received. Recognizing the need for collaborative guidance to enhance disclosure practices and align the CEO's remuneration package with industry standards, we participated in a collaborative engagement in March 2023, facilitated by the Investment Managers' Committee (p22 protocollo_funzionamento_112022.pdf (comitatogestori.it). Despite our efforts, there was no improvement observed and our discontent has been communicated through votes against remuneration-related items.
With the new policy proposed, we acknowledge that the company:
However, we remain cautious about the short-term incentive structure potentially leading to full payment even if objectives are unmet. Nevertheless, we find the gate criterion sufficiently challenging to ensure pay-for-performance alignment. We also note that while there has been improvement in disclosure year-on-year, the third tranche of the incentive plan lacks information on target levels. Additionally, the weighting of non-financial metrics in the long-term incentive plan seems inadequate considering the significance of carbon reduction targets in the sector.
In conclusion, we appreciate the company's responsiveness to shareholder concerns over the past three years and its efforts to implement substantial changes. However, lingering concerns about the long-term incentive plan will continue to be communicated to the company, and we will closely monitor developments until the next general meeting. While we support the remuneration policy as a signal of appreciation for improvements in disclosure and variable structure, our primary concerns regarding the increase in the severance package and the changes made to the CEO contract in 2023 are addressed through our vote under Item 4 and 5, respectively.
Summary of Resolution: Item 4 – Approve Severance Payments Policy
Candriam's Vote Intention: AGAINST (against management recommendation)
Rationale: In light of our collaborative engagement and historical concerns raised, we cast our vote AGAINST this item. The company's proposal to establish the limit for severance payments at a maximum of 24 months of compensation, calculated as the sum of annual fixed remuneration, annual benefits, and the maximum value of the MBO receivable, exceeds the commonly 24-month pay threshold. Typically, this threshold is calculated based on the fixed remuneration at the time of termination and the average annual bonus received over the last three years.
Moreover, potential termination packages might exceed 24 months' pay when factoring in non-compete agreements and payments required by law or relevant national collective bargaining agreements.
Furthermore, we restate our reservations regarding the remaining terms of golden parachute payments. The policy implies that a reduction in the CEO's powers and/or remuneration before December 31, 2026, could trigger such payments. However, the policy's language lacks clarity on what constitutes a 'substantial reduction.' While the company has offered explanations to investors involved in collaborative engagement, the policy's wording still poses the risk of awarding golden parachute payments in cases of significant reductions in powers and remuneration.
We urge the company to further refine the policy's language to specify the circumstances under which a golden parachute payment may be warranted.
Summary of Resolution: Item 5 - Approve Second Section of the Remuneration Report
Candriam's Vote Intention: AGAINST (against management recommendation)
Rationale: Since 2021, we've engaged in numerous discussions with the company to express our concerns regarding transparency and alignment with industry best practices. While we appreciate the increased granularity provided on target and achievement levels, we remain concerned about modifications made to the CEO’s pay package in 2023. Specifically, the company chose to review the main terms of the CEO's contract, amending them on July 6, 2023. This resulted in an increase in the CEO's fixed compensation from EUR 1,117,000 to EUR 1,350,000 without a compelling justification. According to the company's peer analysis, this adjustment renders the CEO's pay 34 percent higher than the median value. Notably, even before the increase, the CEO's fixed pay exceeded the median of selected peer companies, which are larger than BFF Bank or located in markets where pay levels are generally higher compared to Italy.
Moreover, the company agreed to provide a one-off payment of EUR 2.8 million to the CEO as part of the review of the golden parachute clauses included in the CEO's contract. This payment was made to resolve concerns raised by the Italian banking supervisor regarding the problematic nature of the golden parachute trigger. In addition to our concerns about the necessity of compensation for such a change, this results in a further increase in the termination package itself.
Lastly, the CEO's contract was amended again in February 2024 to stipulate that, in the event of the implementation of new share-based incentive until the approval of the 2029 financial statements, the CEO will be entitled to one fifth of the plan’s total bonus pool.
Considering the excessive increase in CEO pay and problematic changes in the contract, we do not support this item.
Summary of Resolution: Item 7.3.2 - Slate 2 Submitted by Institutional Investors (Assogestioni)
Candriam's Vote Intention: FOR (against management recommendation)
Rationale: As co-filers of this resolution, we endorse the slate put forward by Assogestioni. We believe that the nominated candidates bring valuable expertise, particularly in executive compensation, corporate governance, and human resources. Their experience is expected to enhance the remuneration practices at BFF Bank SpA, addressing a longstanding concern within the organization as explained under Item 4 and 5.
Date of publication - 12 April 2024
Pre-declaration Trigger: ESG Metric in Executive Remuneration
Meeting: 25 April 2024
Summary of Resolution: Item 10 – Approve Remuneration Policy of Executive Corporate Officers
Candriam's Vote Intention: AGAINST (against management recommendation)
Rationale: In recent years, we've observed the company's efforts to incorporate new criteria related to health, nutrition, and employee well-being into its variable compensation structure. This year, we've noticed the proposal to include a new metric on water consumption intensity in the long-term incentive plan, which we view as a positive step. Additionally, the company's reduction target in greenhouse gas (GHG) emissions covers the entire value chain (Scope 1-3), aligning with its ambitious GHG emission reduction goals.
However, we've also identified areas of concern especially on the variable remuneration scheme. Firstly, the company lacks disclosure on target levels for Short-Term Incentive (STI) post-performance, raising questions about alignment between STI and LTIP targets. There's a risk that executives may be rewarded annually for meeting GHG emission reduction targets while failing to achieve long-term targets for the same metric by the end of the cycle. Granular disclosure is necessary for shareholders to assess alignment and challenge levels between STI and LTIP targets.
Moreover, we have reservations about the variable payment structure. None of the non-financial metrics reflect the company's plastic management, a significant sustainability challenge highlighted by recent legal actions from an NGO. Given the importance of reducing plastic pollution, the company's overall performance, which forms the basis for the CEO's remuneration, should include progress in this area.
Furthermore, we request additional disclosure on the managerial component of the STI, a qualitative KPI constituting 20 percent of the plan, which achieved 150 percent in 2023. Given the substantial portion of the bonus linked to this metric, more information on target levels, preferably provided ex ante, is essential to assess target stringency. Considering also that the proposed policy allows STI to exceed 150 percent of the CEO’s base salary which is not in line with our voting guidelines, this item does not warrant support.
Date of publication - 29 March 2024
Pre-declaration Trigger: Say-on-Climate
Meeting: 10 April 2024
Summary of Resolution: 1.3 : Approve Progress Report on 2030 Climate Change Plan
Candriam's Vote Intention: FOR (aligned with recommendation)
Rationale: Overall, the company's 2030 Climate Plan appears robust and the company's pathway to net zero by 2040 is clear, supported by adequate decarbonization levers and capex commitments. The targets put in place are validated by SBTi 1.5°C and in line with the IEA net zero scenario. The absence of absolute short and medium-term targets for direct emissions is mitigated by detailed renewable goals in the capacity/generation mix. According to our estimations, EDP is in line to reach its emissions reduction target. For these reasons, we will support the company's Climate Plan. Yet, we underline that absolute reduction targets for direct emissions are still lacking and a disclosure of precise contribution of action plan measures to the objectives set would be welcome. In addition, more granularity on the current 2023-2026 CAPEX Plan and insights on the CAPEX from 2026 onwards are needed. Finally, climate-related criteria into remuneration could be strengthened.
Date of publication - 22 March 2024
Pre-declaration Trigger: Say-on-Climate
Meeting: 14 April 2024
Summary of Resolution: 3: Approve Climate Strategy Report
Candriam's Vote Intention: AGAINST (against management recommendation)
Rationale: We definitely commend the emissions reductions across scope 1, 2 and 3 that Ferrovial has achieved so far. However, we have serious interrogations over the credibility of Ferrovial’s scope 3 reductions target: the company aims to decrease absolute scope 3 emissions 20% by 2030 (against a 2009 base-year), whereas scope 3 emissions account for 92.2% of company’s total carbon footprint. Moreover, are excluded from scope 3 calculation the categories of (2) Capital Goods and (1) Purchased Goods & Services, representing the second and third highest-emitting scope 3 categories after the category (11) Use of sold products and, cumulatively, around 30% of 2023 scope 3 emissions. Therefore, we do not consider scope 3 targets or achieved reductions to be aligned with a 1.5°C pathway. Also, Ferrovial only refers to “carbon neutrality” by 2050, and does not commit to a SBTi-sponsored “net zero”. It is also worth to note that the board has failed to implement ad-hoc independent oversight of climate action at board level.
Therefore, we will not support this resolution.
Date of publication - 18 April 2024
Pre-declaration Trigger: Say-on-Climate
Meeting: 30 April 2024
Summary of Resolution: 9 : Approve Climate Roadmap 2040
Candriam's Vote Intention: FOR (aligned with management recommendation)
Rationale: We will grant a vote FOR GEA’s climate strategy. In overall, we believe that GEA Climate Strategy comprises strong elements making its overall policy robust including its targets which are 1.5°C trajectory validated by SBTi for 2040 (base year: 2019) for the 3 scopes, addressing in mid and long term targets the product emissions which comprises 99% of emissions, and criteria for the supply chain including SBTi. Furthermore, GEA demonstrates strong efforts in putting forward a Say-On-Climate in a market in which these resolutions are less common due to specific legal considerations. We also note positively that, from 2024 on, Scope 3 will also be part of the long-term renumeration.
Nevertheless, there remains room for improvement including enhancing disclosure on the contribution of each lever, capital allocation towards Scope 3 reduction initiatives and further aligning its R&D as well as further disclosure on the maximum use of offsets for residual emissions. While we strongly appreciate SBTi validation on Scope 3 targets, GEA's 2030 scope 3 reduction target of -27.5% seems under ambitious compared to the 2040 target of at least 90% reduction in scope 3 emissions; all the more so since GEA already achieved a solid 22.2% reduction in 2023 against a 27.5% reduction objective by 2030. The latter is another reason for which we would strongly recommend further disclosure on scope 3 reduction initiatives and the corresponding levers and their contribution. We believe that these enhancements strengthen and help build a credible strategy for aligning its business model with a low-emission economy and will assess the company on its progress relative to these recommendations upon its next Say-On-Climate resolution to determine if another vote FOR is appropriate in the future.
Date of publication - 16 April 2024
Pre-declaration Trigger: Say-on-Climate
Meeting: 25 April 2024
Summary of Resolution: 16 : Approve Company's Ambition to Reduce Greenhouse Gas Emissions from its Operating Buildings (Advisory)
Candriam's Vote Intention: AGAINST (against management recommendation)
Rationale: While we commend Gecina for putting such a resolution at the agenda, as well as we acknowledge the ambitious short-term carbon reduction targets set by the company for its Operating Buildings, and commend the company for its strong performance with regards to emissions reductions in recent years, we believe the company’s strategy lacks granularity with regards to its Capex plans to further reduce emissions.As described in company filings, the majority of emissions reductions to date comes from sobriety measures, with a roll-out rate of 73% of the 15 sobriety actions from the CAN0P-30 plan. We would welcome more information on the roll-out of deep renovations and disclosure of CAPEX spend dedicated to them to ensure further reductions of the existing portfolio carbon footprint so that it becomes and remains aligned with a 1.5°C trajectory. We invite the company to formulate its plan for the offsetting of residual emissions from 2030 onwards. We look forward to an update Gecina’s Climate plan including emission reduction targets and the above-mentioned information which would confirm its current emissions reduction trajectory.
Date of publication - 10 April 2024
Pre-declaration Trigger: ESay-on-Climate & Say-on-Biodiversity
Meeting: 19 April 2024
Summary of Resolution: 22 : Approve Report on Progress of Company's Climate Transition Plan
Candriam's Vote Intention: FOR (aligned with management recommendation)
Rationale: Icade SA has medium-term and long-term SBTi validated targets and a detailed roadmap to achieve its goals until 2030. Current absolute and intensity emissions performance since 2019 are in line with the objectives set by the company. However, we would welcome more granularity in the reporting of carbon intensity throughout the asset life cycle as well as by type of assets; historical data on the share of low-carbon assets; and also increased disclosure on CAPEX spend and quantitative objectives for each lever of the climate strategy for the Property development division – the € 145 million investment plan disclosed seems to only cover commercial investment division emissions. Regarding Remuneration, we welcome the confirmation that 25% of the CEO annual bonus is linked to achieving the emissions reduction and biodiversity strategies of the company, but we would welcome additional granularity of the quantitative sub-targets in this area. We will vote For the report this year, but our future support will depend on the improvement brought to the above-mentioned issues.
Summary of Resolution: 23 : Approve Report on Progress of Company's Biodiversity Preservation Plan
Candriam's Vote Intention: FOR (aligned with management recommendation)
Rationale: Icade SA has established targets and reported where there is some advancement and should disclose short-and mid-term Biodiversity targets in the near future, leading peers in the sectors on this topic. According to our estimates, the company has one of the most advanced methodologies amongst peers to integrate biodiversity preservation in its business. It remains still challenging to assess the quality of the plan and its actions as they have not yet provided an assessment based on the new indicators. Further elaboration on nature-related risks and opportunities identified by the company could enhance its disclosure efforts. We will For this resolution to commend the leading approach on Biodiversity, while expecting progress in the coming years.
Date of publication - 20 March 2024
Pre-declaration Trigger: Specific Shareholder Resolution Co-filing and/or Support
Meeting: 18 April 2024
Summary of Resolution: Item 7 - Report on Non-Financial Matters Regarding Sales of Healthier and Less Healthy Foods
Candriam's Vote Intention: FOR (against management recommendation)
Rationale: As recently highlighted again by the World Health Organisation (1), over 40% of adults are now overweight, while obesity has more than doubled since 1990 among adults, and quadrupled among children and adolescents. The many associated pathologies are synonymous with a deterioration in quality of life, and are also putting a strain on healthcare budgets worldwide. Regulators and consumers have understood this, and new consumption patterns are emerging, while government campaigns and regulations are pushing for healthier eating habits. The market's reaction last October (massive sell-offs in the stocks of major food companies) to Walmart's CEO's announcement that he saw the decline in its sales as the result of new treatments for obesity, is a further sign of the growing importance of the health aspect in the product portfolios of giant food companies.
Candriam is part of the investors having cofiled the present resolution. If we are targeting Nestlé today with a resolution, as we successfully did at Unilever in 2022 (2), it is because we are convinced that our request is in line with sustainable growth for the company. Food companies, including Nestlé, must therefore work to improve the nutritional quality of all their products, and not just concentrate on increasing sales of products already labelled as 'nutritious' and disregarding the other parts of the portfolio that actually demand a greater attention in terms of nutritional performance. They must promote healthier products and make them accessible to everyone.
Nestlé's health objective must therefore not only be linked, as it is today, to increasing sales of products recognised as 'nutritious' by independent standards, it must also properly cover the rest of the product portfolio (both considered as health and less healthy parts): both in portfolio and sales, this is the relative share of products “already in” + “additionally coming into” the healthy range (e.g. via product reformulation) that we want to see increased.
So we're waiting for new, clear objectives, based on recognised nutritional standards, and obviously details of the strategy for achieving them.
True, other companies are less advanced than Nestlé on the health/nutrition front, and Nestlé, for example, is very well ranked by the ATNI comparative study (3), which we support. BUT, the whole industry is lagging behind and in spite of repeated demands from Candriam and other investors and stakeholders. Balancing dietary consumption is crucial in all consumer choices, yet this doesn't absolve businesses from the obligation to address the volumes of their unhealthy products, even more when we are all already aware that Nestlé itself acknowledged last year in 2023 that less than half its portfolio of mainstream food and drinks can be considered as “healthy” (4).
In exercising our fiduciary duty as investors, when we are convinced, adopting a risk management perspective, that a topic deserves an increased attention from an industry, we should not content ourselves and settle for companies that merely perform better than rest of the industry – especially for the world’s biggest food manufacturer like Nestlé. When a food giant like Nestlé gives itself the means to achieve an objective, not only does it send out a strong signal to the whole industry, but it also guarantees that the whole industry will take action. The resources that Nestlé can commit to this issue, particularly in terms of R&D and marketing, are very substantial, and this will have an impact on all its stakeholders, including suppliers. The size effect also naturally affects the number of consumers who will be impacted. Filing a resolution is, therefore, a way to escalate our concern.
For an investor like Candriam, supporting such a resolution is obviously a way of giving a positive boost to the social contribution of the companies in our portfolios.
(1) https://www.who.int/fr/news/item/01-03-2024-one-in-eight-people-are-now-living-with-obesity
(2) https://www.unilever.com/news/press-and-media/press-releases/2022/unilever-to-set-new-benchmark-for-healthy-nutrition/
(3) https://accesstonutrition.org/
(4) Nestlé says less than half of its mainstream food and drinks are considered ‘healthy’ (ft.com)
Date of publication - 8 March 2024
Pre-declaration Trigger: Presence of an ESG Controversy
Meeting: 13 March 2024
Summary of Resolution: Item 1d – Elect Management Nominee Director Mellody Hobson
Candriam's Vote Intention: WITHHOLD (against management recommendation)
Rationale: A WITHHOLD vote is warranted for Board Chair Mellody Hobson given that there is a clear need to enhance Board accountability at Starbucks Corporation and the level of independent oversight at the Board level in order to ensure the unbiased functioning of the board, ideally equipped with different skills and expertise to address the challenges of the business. This is particularly key for a company such as Starbucks, which is constantly facing changing dynamics and sustainability risk exposures in its own operations and value chains. The long tenure of the board chair and the excessive number of outside mandates raise questions about her impartial decision-making and oversight. Moreover, the chair of the board ultimately shoulders the most responsibility among all board members for failing to effectively supervise the management of risks to the company and its shareholders and should therefore be held the most accountable for poor board oversight of ESG risk exposures at the firm.
That said, we also acknowledge the company’s recent efforts in agreeing to talks with the unions following the proxy fight driven by the Strategic Organizing Center. This is certainly a meaningful progress that the company has shown. To deliver concrete changes that stakeholders have been asking for, we would encourage the integration of new board members with specific expertise and backgrounds in labor rights and labor management (especially with labor relation backgrounds), responsible sourcing, and human rights, and/or the integration of external experts into its newly created “Impact Committee”.
Date of publication - 2 April 2024
Pre-declaration Trigger: ESG Metric in Executive Remuneration
Meeting: 16 April 2024
Summary of Resolution: Item 2.d – Approve Remuneration Report
Candriam's Vote Intention: AGAINST (against management recommendation)
Rationale: A vote AGAINST this item is warranted because there are concerns raised regarding the CEO's realized pay package amounting to EUR 42 million, which appears excessive according to proxy advisor-selected peers and European standards, and is considered high even when compared to the company's own selected US peers. Furthermore, the excessive quantum of the package is largely driven by the so-called 'transformation incentive' of EUR 10 million which is a one-off additional cash incentive, whereas the existing package is not considered uncompetitive and should already aim to retain and reward the CEO. Also, the benefit package of the company’s executive chair and CEO including the tax equalization and pension contribution also raises concerns.
While we recognize the company's achievement in surpassing synergy goals and exceeding market expectations, we find the overall compensation package to be disproportionately high. Additionally, it's commendable that the company has integrated targets for low emission vehicles into its short-term variable remuneration, signaling a positive step towards aligning executive compensation with non-financial performance.
However, it's important to note that the inclusion of CAFE compliance in the long-term incentive plan (LTIP) cannot be deemed as a challenging metric since it's a regulatory requirement rather than a performance indicator. Nevertheless, in the broader industry context, we appreciate Stellantis's emphasis on linking a significant portion of executive compensation to EV development. That being said, we recommend the incorporation of targets aligned with the company's overall carbon reduction goals, particularly focusing on upstream initiatives for scope 3 emissions.
Date of publication - 18 April 2024
Pre-declaration Trigger: Say-on-Climate
Meeting: 1 May 2024
Summary of Resolution: 4 : Approve Climate Transition Action Plan
Candriam's Vote Intention: AGAINST (against management recommendation)
Rationale: We note positively the recent publication of Unilever’s Climate Transition Action Plan(CTAP) to become Net Zero by 2039 with modified and additional targets on the FLAG-derived emissions, outlining its revised targets incl. the target to remove FLAG-derived and non-derived emissions, policy advocacy (in terms of priority action areas), and its link to the remuneration packages (via 15% weighting for 2024 Performance Share Plan awards that include Sustainability Progress Index). We appreciate the information on the investment allocated of around EUR 1 billion. Revised targets are now based on absolute values, especially on Scope 3. On Scope 3, it commits a 42% reduction in Scope 3 energy and industrial GHG emissions (vs 2021 baseline) by 2030 AND 30.3% absolute reduction in Scope 3 FLAG emissions (vs 2021) by 2030. Altogether, the two targets represent 39% absolute reduction in total targeted Scope 3 emissions by 2030 (vs 2021). We view these as good targets. Decarbonization levers appear relevant and there are more disclosures on what it intends to reduce.
Nevertheless, we are voting AGAINST as there are some areas of concerns that are not fully addressed yet in the CTAP, which still make it difficult for us to fully assess its level of ambition, planned resources, and intended emissions reductions (whether or not they are achievable) especially for the supply chain-derived emissions.
Date of publication - 15 April 2024
Pre-declaration Trigger: Say-on-Climate
Meeting: 24 April 2024
Summary of Resolution: 2a: Elect Richard Goyder as Director – 6: Approve Climate Transition Action Plan and 2023 Progress Report
Candriam's Vote Intention: AGAINST (against management recommendation)
Rationale: We will vote Against Woodside's Climate Transition Action plan because it lacks ambition and credibility and does not align with the Paris goals.
The company has not adopted a commitment or plan but only an "aspiration" of net zero (scope 1&2) by 2050 or sooner. Scope 3 is not included in this aspiration, which is also conditioned on several technological, abatement-related developments that are uncertain to materialize. It has only partially disclosed a Net Zero by 2050 target and has not set medium-term targets aligned with a Net Zero by 2050 pathway.
Moreover, the company’s scope 1&2 reduction plan is heavily based on carbon offsets and integrate actual emission abatement in a meaningful scale only post 2035.
The company does not either have any tangible plans to reduce its Scope 3 emissions. On the contrary, its business plan is to continue the production of oil & gas without near-term, meaningful development of lower carbon services (beyond some ventures in CCS).
We sanctioned last year the lack of climate ambition at Woodside board level by voting Against incumbent members of the Committee responsible for climate risk oversight.
While we acknowledge that the company appointed a new director, given the extent of the climate shortcomings identified above, we will also again this year vote Against incumbent director and board Chair Richard Goyder for insufficient responsiveness to climate oversight concerns widely expressed by shareholders.
Date of publication - 07 July 2023
Meeting: 18 July 2023
Summary of Resolution: Item 6 - Report on Support for a Circular Economy for Packaging
Candriam's Vote Intention: for (against management recommendation)
Rationale: The growing plastic pollution and packaging waste crises pose increasing risks to Constellation Brands. New laws were recently passed in Maine, Oregon, Colorado, and California, while the European Union has enacted a $1 per kilogram tax on all non-recycled plastic packaging waste. A circular economy for packaging, whereby packaging is designed for reuse or recycling and kept in the economy and out of the environment, plays an important role in a sustainable world as a complementary solution to reduction-at-source. Constellation states it is committed to greenhouse gas emissions reductions, yet lacks important goals to ensure the circularity of its product packaging, despite the fact that its sold products and packaging contribute significantly to Scope 3 emissions at their end-of-life. With the absence of reduction target alignments with the global 1.5°C Paris goal, Constellation Brands is already poorly positioned in terms of ambitions in its Scope 3 emissions, which make it challenging for investors to better evaluate its overall commitment especially on circularity in packaging.
To help address the packaging waste crisis and the U.S.’s inadequate existing recycling programs, more than 100 leading companies have committed to promoting a circular economy for packaging by taking financial responsibility for the collection, sorting, and recycling of packaging, a policy known as Extended Producer Responsibility (“EPR”).
Date of publication - 31 May 2023
Meeting: 8 Juny 2023
Summary of Resolution: Item 1 & 2: Approve Financial Statements and Consolidated Financial Statements
Candriam's Vote Intention: Abstain (against management recommendation)
Rationale: Compagnie de Saint-Gobain S.A. (SG) expanded its inclusion of climate factors into its sensitivity analysis in FY2022. It provided a sensitivity analysis of most of its industrial assets to carbon pricing, emissions allowances and achieving its own targets through to 2030, disclosing more detailed carbon price assumptions than FY2021. However, the inputs to this sensitivity analysis did not entirely align with achieving the IEA NZE scenario. SG also failed to explain whether or how it had made any climate-related considerations in the preparation of its financial statements, such for impairment testing of goodwill and PPE, and was therefore inconsistent given its reported targets, strategy and risks. The auditors KPMG and Deloitte did not substantially improve their reporting of whether or how they assessed SG's financials for the impacts of climate considerations. They did not appear to audit SG's sensitivity analysis, raise any issues around consistency or discuss SG's alignment with net zero by 2050.
Therefore we will vote ABSTAIN on both items on Financial Statements, to commend the efforts made since last year on the financial statements, but to also highlight that we expect improvements on how Auditors are taking climate into account in their audit (no other audit-related item to target).
Date of publication - 26 May 2023
Meeting: 31 May 2023
Summary of Resolution: Item 15 – Publish a Tax Transparency Report
Candriam's Vote Intention: For (against management recommendation)
Rationale: At Candriam, we believe that the demand formulated by this resolution is fully aligned with our Proxy Voting Policy as it pushes for more transparency by asking for a country-by-country tax report, which enables us to ensure our investee companies pay their fair amount of tax and assess whether they are involved in aggressive tax planning. Although ExxonMobil argues that much of the asked information is already published, we believe that such a report is a negligible increased burden for the company and would only support the company’s argument that it is both collaborating with various tax authorities in the jurisdictions it operates and subject to some of the highest tax rates in the world. Especially, providing figures on its contributions on a country basis would comfort the company’s statement as well as enable shareholders to assess the risks and opportunities arising from the company’s tax practices.
Candriam considers that the country-by-country reporting of information does not lead to the disclosure of sufficiently sensitive or confidential information as to confer a competitive disadvantage as also specified by the 2018 Review of the EU Commission. We believe that reporting on tax practices and providing stakeholders with more granularity on the different company’s paid taxes should not be seen as a competitive disadvantage. In contrast, we see among the company’s peers that some whose reporting is in line with GRI Tax Standard benefited from such disclosure. Finally, since coming legislation will require ExxonMobil to align with such reporting practices, taking the lead on this would help the company to gain more understanding from investors on its tax practices and on the challenges it faces. As such, we vote FOR this shareholder proposal.
Date of publication - 22 May 2023
Meeting: 24 May 2023
Summary of Resolution: Item 11 – Publish a Tax Transparency Report
Candriam's Vote Intention: For (against management recommendation)
Rationale: At Candriam, we believe that the demand formulated by this resolution is fully aligned with our Proxy Voting Policy as it pushes for more transparency by asking for a country-by-country tax report, which enables us to ensure our investee companies pay their fair amount of tax and assess whether they are involved in aggressive tax planning. Although Amazon.com argues that much of the asked information is already published, we believe that such a report is a negligible increased burden for the company and would only support the company’s argument that it is both collaborating with various tax authorities and a significant tax contributor in the jurisdictions it operates. Especially, providing figures on its contributions on a country basis would comfort the company’s statement as well as enable shareholders to assess the risks and opportunities arising from the company’s tax practices.
Candriam considers that the country-by-country reporting of information does not lead to the disclosure of sufficiently sensitive or confidential information as to confer a competitive disadvantage as also specified by the 2018 Review of the EU Commission. We believe that reporting on tax practices and providing stakeholders with more granularity on the different company’s paid taxes should not be seen as a competitive disadvantage. In contrast, we see among the company’s peers that some whose reporting is in line with GRI Tax Standard benefited from such disclosure. Finally, since coming legislation will require Amazon.com to align with such reporting practices, taking the lead on this would help the company to gain more understanding from investors on its tax practices and on the challenges it faces. As such, we vote FOR this shareholder proposal.
Summary of Resolution: Item 22 – Report on Efforts to Reduce Plastic Use
Candriam's Vote Intention: For (against management recommendation)
Rationale: Amazon does not disclose how much plastic packaging it uses but is believed to be one of the largest corporate users of flexible plastic packaging which cannot be effectively recycled. A recent report by Oceana estimates that Amazon generated 599 million pounds of plastic packaging waste in 2020 and up to 23.5 million pounds of this waste entered the world’s marine ecosystems. Flexible packaging represents 59% of all plastic production but an outsized 80% of plastic leaking into oceans. Amazon has no goal to make all its packaging recyclable.
Amazon is falling behind its peers. Unilever, with the most significant corporate action to date, agreed to cut virgin plastic packaging by half by 2025, eliminating 100,000 tons. At least seventeen other public consumer goods companies including competitors Walmart and Target have virgin plastic reduction goals. IKEA pledged to eliminate all plastic packaging by 2028.
Reducing Amazon’s plastic packaging and making all its packaging recyclable are necessary steps to combat the plastic pollution crisis, and shareholders would benefit from additional information on how the company is managing risks related to the creation of plastic waste.
Summary of Resolution: Item 23 - Commission Third Party Study and Report on Risks Associated with Use of Rekognition
Candriam's Vote Intention: For (against management recommendation)
Rationale: Facial Recognition Technology (FRT) is being rapidly developed and deployed around the world. It is estimated that one billion surveillance cameras in operation around the world, all capable of feeding images into an FRT system. This comes with grave risks to our privacy and our freedom (e.g., freedom of movement, freedom of association). As regulation is by nature reactive and slow, it is essential that companies operating in this technology display impeccable ethics, great care, and a high level of transparency to ensure its safe use before strong regulation is implemented.
In June 2020, following the controversial use of FRT by police force on protesters during the “Black Lives Matter” movement, Amazon implemented a moratorium on use of their facial recognition product Rekognition to law enforcement agencies following the move of other large US tech firms. This decision was a de facto admission that the technology can cause serious harm to human rights and should be researched, developed, used and marketed with extreme care. Since, Facebook has scrapped their FRT functionality on their platform and Microsoft stopped all sales of FRT to police forces, both citing risks to society.
For these reasons we feel that it is crucial that Amazon conducts a rigorous assessment of risks linked to Rekognition in particular and to FRT in general.
A vote FOR is therefore warranted.
Date of publication - 12 May 2023
Meeting: 16 May 2023
Summary of Resolution: Item 9 - Report on Tax Payments
Candriam's Vote Intention: For (against management recommendation)
Rationale: At Candriam, we believe that the demand formulated by this resolution is fully aligned with our Proxy Voting Policy as it pushes for more transparency by asking for a country-by-country tax report, which enables us to ensure our investee companies pay their fair amount of tax and assess whether they are involved in aggressive tax planning. Although ConocoPhillips argues that much of the asked information is already published, we believe that such a report is a negligible increased burden for the company and would only support the company’s argument that it is both collaborating with various tax authorities and a significant tax contributor in the jurisdictions it operates. Especially, providing figures on its contributions on a country basis would comfort the company’s statement as well as enable shareholders to assess the risks and opportunities arising from the company’s tax practices.
Candriam considers that the country-by-country reporting of information does not lead to the disclosure of sufficiently sensitive or confidential information as to confer a competitive disadvantage as also specified by the 2018 Review of the EU Commission. We believe that reporting on tax practices and providing stakeholders with more granularity on the different company’s paid taxes should not be seen as a competitive disadvantage. In contrast, we see among the company’s peers that some whose reporting is in line with GRI Tax Standard benefited from such disclosure. Finally, since coming legislation will require ConocoPhillips to align with such reporting practices, taking the lead on this would help the company to gain more understanding from investors on its tax practices and on the challenges it faces. As such, we vote FOR this shareholder proposal.
Date of publication - 26 April 2023
Meeting: 11 May 2023
Summary of Resolution: Item 8.3 - Elect Punit Renjen to the Supervisory Board
Candriam's Vote Intention: For (aligned with management recommendation)
Rationale: As an active investor, Candriam engaged with SAP SE since 2020 within the context of our pre-AGM engagement campaign to share our concerns about the influence of the non-independent chairperson on board committees and the company’s remuneration structure. We shared with the company in our AGM question submitted at the 2022 meeting that the chairperson of the supervisory board, Hasso Plattner, has been involved in several committees at the board level which increases our concerns about his high influence as a long-tenured director at the company. While noting that he has been handing over his responsibilities to the other members of the board gradually over the past years, our concerns remained unchanged as he stayed as a member of the sub-committees of the board.
During our engagement, however, the company announced that Hasso Plattner leaves office at the May 2024 AGM and a new successor would be appointed at this meeting. Considering that the company has nominated Punit Renjen as an independent candidate for the upcoming elections and he will also be the designated successor to the chairperson of the board, our concerns on the biased functioning of the committee work, continuity and the smooth transitioning of the board were cleared.
In the absence of any concerns, we support the election of Punit Renjen.
Summary of Resolution: Item 9 - Approve Remuneration Policy for the Management Board
Candriam's Vote Intention: For (aligned with management recommendation)
Rationale: As an active investor, Candriam engaged with SAP SE since 2020 within the context of our pre-AGM engagement campaign to share our concerns about the influence of the non-independent chairperson on board committees and the company’s remuneration structure. After two years of engaging, we finally submitted two AGM questions at the company’s 2022 shareholders’ meeting on the personnel and governance committee composition and the remuneration structure. Although the answers at the meeting were not satisfactory, the company reached out to its shareholders in the upcoming months to address the concerns raised by the investors and to communicate the changes they wish to bring to their remuneration policy.
We acknowledge that with this revised policy, the company:
While the newly-brought improvements clear a majority of our concerns, there are two remaining questions that will be closely monitored in the upcoming years. First, we note that the company keeps the discretion to adjust the variable remuneration upwards and downwards to a certain limit. However, the company communicated in our engagement that such cases will be explained and always be accompanied by a compelling rationale in the compensation reports. Secondly, the company has not changed the change-of-control provision which would result in the accelerated vesting of 50 percent of performance share units which would otherwise be forfeited and this is not in line with the best market practices nor aligned with the G. 14 of the German Corporate Governance Code. As such, we will keep engaging with the company on this matter.
Overall, considering the changes that the new policy brings for further alignment with SRD II, we support this resolution.
Date of publication - 21 April 2023
Meeting: 3 May 2023
Summary of Resolution: 1 & 2 - Financial and consolidated financial statements
Candriam's Vote Intention: Abstain (against management recommendation)
Rationale: Air Liquide has shown again this year its ability to bring improvement following investor engagement, notably by adding a scope 3 lobbying policy (e.g., in recent years, brought Net Zero commitment in 2021, Scope 3 inclusion in 2022). As one of the top emitting companies in our portfolios, we need consistent proof and quantitative reassurance that Air Liquide accounts are consistent with the transition challenge we are all facing. However, Air Liquide does not provide details around how it made this determination, such as the estimates and assumptions it used for short- and long-term carbon pricing or the useful lives on carbon-intensive assets. Therefore, to acknowledge the progress but to highlight the improvements needed, we vote Abstain.
Date of publication - 21 April 2023
Meeting: 27 April 2023
Summary of Resolution: Item 1 – Accept financial statements and statutory reports
Candriam's Vote Intention: Against (against management recommendation)
Rationale: Despite some improvements, we cannot approve CRH’s financial statements where there remain questions over critical accounting assumptions such as the carbon price and discount rates used, and where they fail to provide the requested visibility for a 1.5°C pathway. This vote is taking into consideration the long standing engagement led under the umbrella of IIGCC, where Candriam has been active since 2019.
Summary of Resolution: Item 4.e. – Re-Elect Shaun Kelly as Director
Candriam's Vote Intention: Abstain (against management recommendation)
Rationale: CRH plc accounts continue to lack visibility for 1) how material climate risks are reflected in critical accounting assumptions, notably the carbon price and discount rates used in impairment testing, 2) how precisely CRH’s medium to longer-term decarbonisation targets are integrated into its financial statements, and 3) the implications of a 1.5°C pathway for its financials given the results of the 1.5C scenario in CRH’s TCFD disclosure suggests this is high probability and high impact. However, in recognition of the efforts made by the company on its accounts and the long standing engagement with the IIGCC Lead where Candriam has been active since 2019, we will vote Abstain this year.
Summary of Resolution: Item 6 - Ratify Deloitte Ireland LLP as Auditors
Candriam's Vote Intention: Against (against management recommendation)
Rationale: While Deloitte provides additional commentary in its UK report on how climate risks have been considered, and the consistency between the financial statements and climate targets, they offer no disclosure on how the medium to longer term decarbonisation targets are accounted for, or views on the carbon price assumptions used. No comment is provided on the sensitivity to a 1.5°C pathway, despite CRH’s net-zero ambition. This vote is taking into consideration the long standing engagement led under the umbrella of IIGCC, where Candriam has been active since 2019.
Date of publication - 20 April 2023
Meeting: 26 April 2023
Summary of Resolution: B - Amend Articles 21 and 24 of Bylaws Re: Climate Strategy
Candriam's Vote Intention: For (against management recommendation)
Rationale: Despite ENGIE’s efforts to decarbonise its activities, investors currently lack significant pieces of information in order to evaluate the company’s projected plans against a 1.5°C pathway with low or no overshoot. Although the company has a SBTi well-below 2°C target, we have been reminded by the Intergovernmental Panel on Climate Change (IPCC) that any decimal in temperature increase above 1.5°C will have significant negative impacts. The Investor Coalition is not asking ENGIE to change its strategy. Rather, it is asking for improved disclosure to gauge the gap between ENGIE’s current projected trajectory and what would be required of the company to align its decarbonisation plan with requirements of 1.5°C scenarios. This assessment is particularly relevant in light of ENGIE’s purpose (“raison d’être”) to “act to accelerate the transition towards a carbon-neutral economy”. As investors, we are bound by our climate commitments and legal obligations. Disclosure on relevant data of the company’s climate strategy, including assumptions and scenarios, are key for proper shareholder understanding. In the process leading up to the filing, the investors have had multiple meetings with ENGIE’s Board of Directors and teams and have worked with a number of stakeholders including energy and climate experts in the regular course of business as well as NGOs and lawyers. The wording of the resolution was carefully crafted and aims at ensuring that it is receivable from a legal standpoint. The fact that ENGIE’s Board of Directors has decided not to support it demonstrates that the resolution is ambitious and pushes the company to go further in its disclosure. Furthermore, while we appreciate ENGIE’s commitment “to consult its shareholders on its climate strategy every three years or in the event of a significant change in it”, we regret that the company was unable to commit to including specific information in their progress report, which will now be presented at every annual general meeting. This prevents investors from knowing whether they will be able to assess Engie’s alignment with a 1,5°C scenario. Therefore, we disagree with the Board of Directors’ statement that “ENGIE has responded to the essential concerns expressed by the investors who proposed this resolution”. We had a constructive dialogue with Engie throughout the whole process, and our vote For this resolution should be seen as a further encouragement for disclosure to have a well-informed conversation about ENGIE’s contribution to climate change impacts.
Date of publication - 19 April 2023
Meeting: 28 April 2023
Summary of Resolution: Item 3a – Re-elect Jost Massenberg as Director
Candriam's Vote Intention: For (aligned with management recommendation)
Rationale: Our active engagement with the company over the past 3 years has covered many topics including the lack of diversity at the board level which impacts in our view the ability to exercise a real counter-power at the company. Candriam encourages diversity at the board level in all aspects including gender, skills and international representation. We acknowledge that the company commits to increasing female representation to a minimum of 40 percent and to increasing international representation on the board over the years. With the successive appointment of Senan Murphy in Q4 2022 and Louise Phelan, the diversity of competencies has increased among independent directors and the representation of women at the board level has increased to 36 percent which is considered a strong improvement. However, we raise concerns about the fact that Ms Phelan’s appointment has not been put up for shareholders’ vote at this AGM although her appointment has been confirmed before the meeting date. With this practice, shareholders are not able to voice their opinion on her appointment for another year and cannot express potential concerns on the recruitment & nomination processes, including whether it could be relevant to seek assistance from external recruitment agencies to broaden the scope of candidates beyond Board members’ personal networks.
Moreover, we still believe that the board would benefit from a wider representation of the regions in which it operates (over 46 percent of the revenue was generated outside of western and southern Europe and the remaining 54 percent includes France, Benelux, Spain and Britain). While it is noted that the appointment of Senan Murphy is a step in the good direction of enhancing industry expertise, we encourage the company to appoint new Board independent members from various nationalities with strong international experience who would sufficiently respond to the key business challenges.
Given also the fact that Kingspan is not planning to put another proposal linked to its Planet Passionate strategy on the ballot nor an annual resolution linked to the progress towards the targets and objectives as set in the strategy, the board members appointed should be skilled enough to identify and react to the company’s key sustainability challenges including climate-risk management and other sustainability risks. On this point, we strongly encourage the company to adopt progress votes on the targets and objectives set in the strategy.
Appreciating and acknowledging the company’s efforts in constructing an inclusive dialogue with its stakeholders and expecting that continuous efforts will be paid to further increase the diversity on the board in all aspects, we vote FOR the election of Jost Massenberg.
Date of publication - 18 April 2023
Meeting: 25 April 2023
Summary of Resolution: Item 9 – Report on Risk Due to Restrictions on Reproductive Rights
Candriam's Vote Intention: For (against management recommendation)
Rationale: Reproductive rights actually referred to in the resolution are fundamental human rights: as expressed by human rights bodies such as the Office from the High Commissioner on Human Rights [1], access to abortion is a fundamental right. Restricting such rights impact not only individuals and their relatives but also their whole personal and professional life. In that respect, Candriam brings its support to the resolution as corporates will indeed be impacted by such laws restricting access to reproductive technologies. With that being said, our support is not without concern. Indeed the wording of the proposal may have an impact of focusing on a specific group of employees only and asking a company to report on the risks and costs caused by the above legislation which may reinforce prejudices about working parents and deepen discriminatory behaviours based on gender. While the wording of the proposal only mentions reporting on risks and costs associated with the said laws (which is an intentional choice by the filer to eliminate the possibility of the proposal being rejected by the issuer), we share the objective that is mentioned in the supporting statement by the filer that the company should demonstrate the consequences of such laws on employee hiring, retention, and productivity, and decisions regarding closure or expansion of operations in states proposing or enacting restrictive laws and strategies such as any public policy advocacy by the company, related political contributions policies, and human resources or educational strategies.
In that context, we reiterate Candriam defends non-discrimination values and in particular promotes measures supporting
• working parents ( flexible work arrangement, quality childcare options, adapted health coverage, prevention of discrimination etc)
• workers seeking access to reproductive technologies and forced to travel out of their residence state due to laws restricting reproductive rights
• any corporate initiative advocating against state laws restricting access to fundamental human rights.
We believe such measures, as they participate in the well-being of employees, will also increase their level of engagement and ultimately serve the sustainable fundamentals of the company.
[1]https://www.ohchr.org/sites/default/files/Documents/Issues/Women/WRGS/SexualHealth/INFO_Abortion_WEB.pdf
Date of publication - 11 April 2023
Meeting: 20 April 2023
Summary of Resolution: Item 4 – Approve Auditors' Special Report on Related-Party Transactions
Candriam's Vote Intention: Against (against with management recommendation)
Rationale: Every year, LVMH submits to the shareholders’ vote its related party transactions involving mainly executive directors who also hold shares at LVMH. In line with best market practices, related parties should not participate in the vote submitted to shareholders on such transactions with related parties may represent a material conflict of interests and it is the board’s responsibility that all shareholders are treated fairly. Therefore, such transactions should be up for a vote by non-conflicted shareholders only. The controlling shareholding group has been voting at AGMs on related party transaction items for which it can be considered conflicted.
Moreover, due to the legal process in place in France, auditors are not required to give their opinion on the transaction itself nor to assess whether it is in the interest of shareholders. It is the legal responsibility of the concerned individuals to inform the chair when they are an interested party in a transaction. As the chairperson and CEO positions are combined at LVMH and the related party transactions are mainly concerning him, we raise legitimate concerns on the review and approval process of such related party transactions and vote AGAINST this item.
Summary of Resolution: Item 5 – 9: Re-election of Directors
Candriam's Vote Intention: Against (against with management recommendation)
Rationale: As an active investor, Candriam engaged with LVMH for four years consecutively to share our concerns on the company’s governance structure. Given that the outcome of the engagement was clear that the company do not intend to make improvements on the concerns we raised and kept the position that as a family-owned company, the best market expectations and practices cannot be applicable to its structure. As our escalation, we submitted questions on four main topics at your AGM in 2022, however, the answers provided were elusive and veiled.
Our main concern was on the balance of powers at the supervisory level as the current structure of combined CEO and chairperson roles (given also the lack of a succession policy, it represents a serious degree of key-person risk), the long tenure of the lead independent director and the overall independence of less than 40 percent (calculation based on the AFEP-MEDEF code defining independence classification) pose a risk to resolving potential conflicts of interest and weaken the company’s risk management ability (as also recognized by AMF multiple times). As this structure raises questions on the board’s ability to oversight the management actions thoroughly and the incumbent board members have not been responsive to the concerns raised in this matter, we vote AGAINST the re-election of incumbent board members. Also, we would like to underline that the company is expected to commit to announcing its succession planning for the roles of CEO and chairperson and the roadmap for the handover of the tasks and responsibilities as the lack of such visibility may become a material risk that is threatening the business continuity.
Summary of Resolution: Item 14: Approve Compensation of Bernard Arnault, Chairman and CEO
Candriam's Vote Intention: Against (against with management recommendation)
Rationale:We draw attention to the fact that LVMH is lagging behind the best market practices for the disclosure of weightings for each non-financial criteria, threshold, target and maximum level of each performance metric attached to the variable remuneration. The company argues that no details can be given due to confidentiality reasons vis-à-vis competitors, however, ex-post information on the target and achievement levels do not pose a potential confidentiality risk and the justification provided cannot remain valid. Without such information, it is not possible for investors to assess whether or not the interest of executives is aligned with those of other stakeholders.
Moreover, the nature of the financial criteria attached to the long-term incentive plan is short-term oriented and the company failed to provide information on the non-financial metric used for the assessment. As such, we vote AGAINST this item.
Summary of Resolution: Item 17: Approve Remuneration Policy of Chairman and CEO
Candriam's Vote Intention: Against (against with management recommendation)
Rationale: Reiterating our concerns put under Item 14, we would like to underline that the company’s remuneration policy lags behind the best market practices and investor expectations due to the fact that:
These concerns are aggravated by the fact that the board is not sufficiently independent (as explained under Item 5-9) and the company’s remuneration committee is only 50 percent independent which raises concerns about the ability of objective oversight of the company’s remuneration practices. We believe that enforcing a sufficiently independent remuneration committee (ideally 100 percent) would have a positive impact on increasing disclosure levels on the company’s remuneration practices and provide some level of confidence for the investors that the company’s practices are overseen by independent members of the board.
Date of publication - 4 April 2023
Meeting: 13 April 2023
Summary of Resolution: Item 6 - Approve Compensation of Daniel Julien, Chairman and CEO
Candriam's Vote Intention: Against (against with management recommendation)
Rationale: As an active investor, Candriam continuously engaged with Teleperformance both directly and in collaboration with other investors to share our concerns and examples of good practices in both governance and social topics. Despite some improvements on the social pillar (setting up a CSR committee and increased disclosure of human capital), significant risks remain. Apart from the concerns on the combined role of CEO and chairman and the long-tenure of auditors, executive remuneration has been one of the key discussion points with the company as the financial and non-financial metrics for the variable remuneration plans and the vesting scale of those plans lack stringency.
Under this item, we reiterate our concern that the non-financial metrics chosen by the company to assess its performance are not considered reflective of the recent challenges the company has faced. We find the use of ‘Great-place-to-work’ surveys insufficient as the main indicator of employee well-being and satisfaction. We find an annual qualitative survey insufficiently informative or transparent in an employee-intensive business.
Furthermore, considering the recent events in Colombia and in the US, it is confirmed that the company’s choices of non-financial metrics are not indicative of its performance as the achievement was put at 100 percent while the events caused reputational risk for the company, allegations of bad work conditions and a decrease in the company’s stock price.
Considering all concerns explained above and also the presence of organic revenue growth metric both in bonus and LTI and the total remuneration exceeding two times the median of peers, we vote AGAINST this item.
Summary of Resolution: Item 3 – Approve Remuneration Policy
Candriam's Vote Intention: Against (against with management recommendation)
Rationale: Following a long-lasting engagement with the company and due to the concerns about the company’s choice of non-financial metrics in executive remuneration, we submitted a question at the AGM in 2022 (please refer to answers provided to investors' coalition’s questions, p9 https://www.teleperformance.com/media/neudhyed/questions-ecrites-en-vdef.pdf) asking the company to investigate investor views on whether a more verifiable data point that can be measured over time and benchmarked against other companies can be used.
We are pleased that the company has reconsidered the opinion expressed in response to our questions and that it has decided to extend the number and quality of indicators attached to compensation from 2023. The attrition rate is now one of them. With that, we commend and acknowledge that the company has added ‘attrition rate’ to the annual bonus scheme. However, given that 1) the overall weight attached to this metric is 5 percent while the other employee engagement metrics (based on satisfaction surveys) have 15 percent in the whole bonus payout and 2) the target level is already achieved by the company in the past year in spite of the strong controversies experienced by the company, particularly over the last quarter of 2022, we raise questions about whether the targets are relevant and challenging for the company.
Considering the concerns stated above and also the lack of claw-back clause in the LTI and the high level of LTI grant despite the sharp fall in the stock price, we vote AGAINST this item.
Date of publication - 31 March 2023
Meeting: 13 April 2023
Summary of Resolution: Item 1 – Approve Financial Statements
Candriam's Vote Intention: Abstain (against management recommendation)
Rationale: Since 2021, we held several engagement calls with the company to share our concerns about the lack of transparency and alignment with the best market practices. While some of them were addressed in 2022, the policy and the disclosure practices under the remuneration report still fall short of expectations and this concern was shared by other investors given the high dissent received. So far, we have signalled our discontent through our votes against the remuneration-related items only and through engagements held with the company which did not deliver the expected outcome. Furthermore, we note that the AGM will not be broadcasted and shareholders are given the option to attend and vote via the company-designated proxy holder only. This diminishes shareholders’ rights to actively participate in the company’s AGM and interact with the management and the board during the meeting. In such cases, we expect our investee companies to ensure that shareholders’ rights are protected during the meeting and that the meeting is not held behind closed doors without any interaction with the shareholders.
With that, we wish to deliver our message to the company by applying an abstain vote on its financial statements.
Summary of Resolution: Item 3 – Approve Remuneration Policy
Candriam's Vote Intention: Against (against management recommendation)
Rationale: Since 2021, we held several engagement calls with the company to share our concerns on the lack of transparency and alignment with the best market practices. While some of them were addressed in 2022, the policy and the disclosure practices under the remuneration report still fall short of expectations and this concern was shared by other investors given the high dissent received (40 per cent in 2022). As we believed that the company should be guided collaboratively to increase its disclosure practices and align the remuneration package of the CEO with the best market practices, a collaborative engagement has been held in March 2023 under the moderation of the Investment Managers’ Committee (p22 protocollo_funzionamento_112022.pdf (comitatogestori.it) during which the shared concerns were explained to the company. While we acknowledge the improvements that the new policy brings (including more material and relevant ESG metrics next to customer satisfaction), the company still lags behind the market expectations regarding disclosure and transparency.
Furthermore, we raise significant concerns about the composition of the remuneration committee as the company failed to provide the public with compelling explanations after the resignation of an independent member from the board which signals a potential conflict of interest. Given also the lack of reaction to the high dissents over the years, we strongly encourage the board to revise the composition to have a fully independent committee with remuneration experts present.
Considering all the concerns explained above, we vote AGAINST this item.
Summary of Resolution: Item 4 – Approve Severance Payments Policy
Candriam's Vote Intention: Against (against management recommendation)
Rationale: Linked to our collaborative engagement and the concerns raised historically, we vote AGAINST this item as the company's proposed policy on termination payments is not in line with acceptable market practice due to the fact that the potential severance payments will be calculated based on the average of the total variable compensation paid/assigned in the last three years, considering stock options/phantom stock options (instead of only the value of the MBO paid in the last three years). Moreover, the company has failed to address concerns raised in the last year regarding the quantum of the total potential termination payments. Lastly, we raise concerns on the terms of golden parachute payments as the policy provides that the reduction of the CEO’s powers and/or remuneration during any term of office prior to the date of approval of the company’s financial statements on Dec. 31, 2026. It is not clear from the wording of the policy which situations would be considered as ‘substantial reduction’. The company has provided their explanations to the investors who joined in the collaborative engagement, however, the wording of the policy still bears the risk of granting golden parachute payments in case of a substantial reduction of powers and remuneration.
We encourage the company to revise the wording of the policy to precise the conditions under which a golden parachute payment can be made.
Summary of Resolution: Item 5 – Approve Second Section of the Remuneration Report
Candriam's Vote Intention: Against (against management recommendation)
Rationale: Since 2021, we held several engagement calls with the company to share our concerns on the lack of transparency and alignment with the best market practices. While some of them were addressed in 2022, the policy and the disclosure practices under the remuneration report still fall short of expectations. We still consider that without sufficient information on the exact target levels and the assessment of each metric, it is not possible to assess whether the schemes are stringent enough. The company stated during the engagement call that they do not provide ex-post disclosure on the target levels as such information is price sensitive. However, we find that full disclosure on the ex-post target levels and the assessment of the performance already achieved during the performance period are required for stakeholders to assess the objectivity and the stringency of the plans. Considering all together with the fact that the 2022 annual bonus can be paid in full even though some objectives were underachieved, we vote AGAINST this item.
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