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267694 EdinburghIT AR 2024 WEB - Flipbook - Page 29


THE EDINBURGH INVESTMENT TRUST PLC / STRATEGIC REPORT / 27
Members of the Portfolio Manager’s investment team are
responsible for overseeing all aspects of the Stewardship
process, including voting on all resolutions at all Annual
General Meetings and Extraordinary General Meetings in the
UK and overseas. The Portfolio Manager assesses corporate
governance, remuneration policies and, if deemed necessary,
will challenge management where it is felt that the best interests
of shareholders are not being met.
The Board reviews the Portfolio Manager’s voting record at
each meeting. The table below demonstrates how the Portfolio
Manager voted during the year in review. The Portfolio Manager
voted at all meetings, except for an unlisted legacy holding in
Raven Property.
Total
Items
%
Against
0
89
0%
3
190
2%
0
6
0%
For
Against
Audit related
89
Capitalisation
187
6
Company articles
Compensation
Director election
Environmental
101
4
105
4%
462
0
462
0%
2
2
4
50%
Misc
41
1
42
2%
Routine business
92
3
95
3%
Social
16
10
26
38%
8
0
8
0%
1,004
23
1,027
2%
Strategic transactions
Total
The Portfolio Manager’s policy is to invest in well-managed
companies. We therefore expect few contentious votes, but
in any given twelve month period there will be a handful. The
examples below are drawn from this handful and demonstrate
how the Portfolio Manager voted on certain ESG issues and
the rationale behind each vote.
RS Group. Resolution summary: to approve the company’s
remuneration policy. As was also the case in 2022, this
was a contentious vote, with some third-party advisors
recommending their clients to vote against it. Nevertheless,
the Portfolio Manager supported the resolution. The
Portfolio Manager believes the CEO and Financial Director
have done an outstanding job in reversing the fortunes of the
company and positioning the business for long term success.
It is important for their remuneration to be competitive and
for the award targets to be stretching. The resolution was
passed, albeit with 38% of votes cast against.
Shell Group. Resolution summary: this was a shareholder-filed
resolution, which requested Shell to align its greenhouse gas
(GHG) targets with those of the Paris Climate Agreement.
The shareholder resolution stated that the Company’s
existing GHG reduction plan does not comply with the Paris
Climate Agreement. However, the Company argues that its
overall goals are Paris-aligned. The Portfolio Manager was
comfortable with Shell’s overall GHG reduction strategy and
its Paris alignment. The shareholder resolution would have
required a change in strategy which may not be appropriate
given that a new strategy is due to be unveiled at the 2024
AGM. As such, the Portfolio Manager voted against the
resolution. At the AGM, the resolution attracted 20% of votes
in favour and was not therefore carried.
Unilever. The Portfolio Manager voted against the
remuneration policy. The incoming CEO’s base salary was
set at c.18.5% higher than his predecessor and is significantly
higher than his current salary at Royal Friesland Campina, and
UK market peers. The Company did not provide compelling
justification for this remuneration package, and as such the
Remuneration Report was opposed. At the vote, 58% of
shareholders voted against, which meant the Remuneration
vote was not carried. Subsequently, the Company engaged
with shareholders and amended the CEO’s pay structure,
stating that his fixed pay structure would be frozen for two
years, meaning that he would next be eligible for an increase
in his fixed pay terms in 2026.
In addition, the Manager publishes an annual Responsible
Capitalism report, providing cumulative voting statistics, full
disclosure on voting policy and extracts of engagement for
the year. The Manager publishes a quarterly voting record on
its website www.liontrust.co.uk.
MODERN SLAVERY DISCLOSURE
The Company aims to adopt the highest standards of
conduct and is committed to integrating responsible
business practices throughout its operations. The prevention
of modern slavery is an important part of corporate good
governance.
The Company is an investment vehicle and does not provide
goods or services in the normal course of its business or have
customers or employees. Accordingly, the Directors consider
that the Company is not required to make any slavery or
human trafficking statement under the Modern Slavery
Act 2015.