Voting policy at general meetings

Voting policy at
general meetings
June 2016
1. Exercising voting rights in the interest of investors
As one of the leading fund managers in Switzerland, Swisscanto invests in shares of Swiss and foreign companies
through its investment funds. By investing indirectly through
funds, the investor entrusts the fund company with the
exercise of voting rights at shareholders‘ meetings and, in
accordance with the fund contract, expects the fund company
to exercise those rights in his best interest.
Because of the often significant shareholdings in Swiss companies, Swisscanto follows the “2016 Swisscanto Sustainability Proxy Voting Guidelines for Swiss Companies” guideline, which focuses on specific concerns of Swisscanto. For
companies headquartered outside Switzerland, the ISS “2016
Sustainability International Proxy Voting Summary Guidelines”
apply. English versions of both voting policy documents are
available on the Internet.
With the active and independent exercise of voting rights in
its active and passive investment funds, Swisscanto practises
a systematic and responsible exercise of shareholders‘ voting
rights for its investors.
The guidelines for the exercise of voting rights are applicable
within the Swisscanto Group for both fund companies,
Swisscanto Fund Management Company Ltd. in Switzerland
and Swisscanto Asset Management International S.A. in
Luxembourg. Both fund companies rely on the same voting
policy, but have their own decision-making bodies.
The present voting policy outlines the principal guidelines
applied by Swisscanto when evaluating proposals submitted
by the board of directors. Swisscanto always votes at general
meetings of listed companies with their corporate domicile
in Switzerland, provided that the voting stake in the company is higher than 1% or the market value of the shares held
exceeds CHF 1 million. In the case of foreign equities, a vote
is cast on all agenda items if at least one motion contradicts
investors‘ long-term interests. With foreign companies, the
minimum requirements for actively exercising voting rights are
1% of the shares held or a market value of at least CHF 10
million.
2. Basic principles of voting policy
A proper corporate governance is the central component of a
corporate strategy aligned to the long-term sustainability and
enhancement of corporate value. Swisscanto bases the exercise of voting rights on a number of Swiss and international
corporate governance rules, as well as on the United Nations’
Principles of Responsible Investment (UN PRI), that specify a
comprehensive package of environmental, social and governance standards for the decision process.
The basic principles of Swisscanto’s voting policy were developed in collaboration with ISS (Institutional Shareholder
Services Inc.), the world’s leading shareholder consultant.
Voting policy at general meetings
June 2016
3. The main voting guidelines
The points below are a selection of the main points on the
agenda subject to voting which are often controversial and
frequently cause Swisscanto to vote against the recommendation of the board of directors:
3.1. Dividends
Dividends are the shareholders’ financial share of the profit
and should be paid to the shareholders. Swisscanto votes
against dividend payout proposals when the dividend payout
ratio has been below 30% for several consecutive years or if
the company’s financial situation does not justify payout.
For Swiss companies, the threshold is 10%, in which the double tax burden borne by large private shareholders is taken
into account.
3.2. Discharge
Granting discharge restricts shareholders’ possibility of
recourse against boards of directors. Therefore, Swisscanto
refuses a discharge in cases of gross misconduct or of a legitimate suspicion of criminal acts by a board.
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3.3. Capital increase
Capital increases without subscription rights for existing
shareholders dilute earnings for those existing shareholders.
Swisscanto authorises the board of directors to carry out, at
its sole discretion, a capital increase to a maximum of 100%
of the existing capital, provided that the subscription rights
for existing shareholders are guaranteed. Without subscription rights, a cap of 20% applies. Regular capital increases are
evaluated on a case-by-case basis, for example when used for
an acquisition or for strengthening the balance sheet.
For Swiss companies, a limit of 20% of the existing capital
applies for conditional or authorised capital, provided that
subscription rights are not excluded. In addition, Swisscanto
votes against capital increases for employee participation
programmes.
3.4. Capital structure
Unequal membership rights cause individual shareholders
to have disproportionate weight in relation to the capital
employed. Swisscanto adheres to the “one share = one vote”
principle and opposes the introduction of share classes with
different voting powers as well as of voting restrictions.
3.5. Takeovers and mergers
Acquisitions are part of a dynamic business, but they can also
lead to substantial losses. Approval of mergers or acquisitions is given on a case-by-case basis, taking into account the
following criteria:
 Appropriateness of the valuation
 Market reaction indicated by the share price
 Does a merger make sense strategically?
 Are there any conflicts of interest that favour certain
individuals or specific groups?
 How does the corporate management (governance) change?
3.6. Sustainability
Swisscanto believes that companies will succeed in the long
run, and thereby act in the interest of their shareholders, if
they shape their processes in a socially responsible manner
and optimise them from an ecological and economical point
of view. The shareholders can encourage companies to be
active in this regard.
Topics in ESG (Environmental, Social and Governance) areas
are usually not dealt with at general meetings. In the U.S.,
shareholder proposals regarding ESG themes are already
widespread, while this issue is gradually gaining importance in
other markets. Measures that contribute to greater transparency with respect to ESG issues are supported if they can be
implemented at reasonable cost levels.
The following rules apply only to individual markets, especially
Switzerland:
Voting policy at general meetings
June 2016
3.7. Independence of the Board of Directors
Conflicts of interest may lead to decisions conflicting with
the interests of shareholders. Swisscanto votes against the
election of members of the Board, unless the majority of the
Board of Directors consists of independent members.
Members of the Board of Directors are considered nonindependent particularly if they
 represent a large group of shareholders,
 have business relations with the company as representatives
of a group of interest or as private individuals,
 are among the founders of the company,
 have been working for the company for more than 12 years,
 have previously served as CEO.
Moreover, Swisscanto votes against the election of members of
the Board (e.g. CEOs) if they are members of the remuneration
or audit committees.
3.8. Dual mandate
A proper assessment of checks and balances is an effective
method for reaching better decisions and ensuring effective
controls. In the case of Swiss companies, Swisscanto is, in
principle, against candidates who simultaneously chair the
Board of Directors and act as CEO (dual mandate). Exceptions
are made when the dual mandate is a transitional solution
and organisational structures are in place as control mechanisms.
3.9. Remuneration
Remuneration systems can offer the wrong kind of incentives, which are not in the interest of the company and its
shareholders. In Switzerland, remuneration reports have been
mandatory since January 2014 when the federal ordinance
against excessive remuneration came into force, following
adoption of the so-called fat cat initiative in a referendum in
March 2013.
For the remuneration of members of the Board of Directors
and the Executive Board, the following principles apply:
 The remuneration system must be laid out clearly and
comprehensively. Long-term incentive schemes must contain
clear performance criteria. In addition, the remuneration
amount has to be capped at a maximum.
 The remuneration must be consistent with the performance and be aligned with a long-term increase in value
for shareholders (pay-for-performance). Payments that are
guaranteed or subject to a large degree of discretion must
be avoided.
 Agreements that involve a high payout, even in case of
failure of management, must not be approved.
 The remuneration committee should not be composed of
members of the executive board and should mainly consist
of independent members of the board of directors.
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4. Information to investors
The actual voting behaviour of the two Swisscanto fund companies is documented in detail. The Swisscanto fund companies will, at any time, provide information about their voting
behaviour at the request of an investor.
Swisscanto makes its voting behaviour in each individual case
available in a transparent manner on the Internet. The following link takes you to a search interface where you can enter
the desired criteria.
5. Additional service for investors and clients
Interested investors and marketing partners of Swisscanto can
subscribe to an e-mail service to receive information and recommendations regarding how to vote at forthcoming general
meetings. The recommendations follow the voting instructions for Swiss equities in force at Swisscanto.
Contact
Swisscanto Fund Management Company Ltd.
Bahnhofstrasse 9
CH-8001 Zurich
Phone
+41 58 344 49 00
Fax
+41 58 344 49 01
[email protected]
This document may not be used for a public or commercial purpose without prior written permission of Swisscanto Fund Management Company Ltd.
Voting policy at general meetings
June 2016
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