The power of the proxy vote is mighty, as anyone who witnessed Engine No 1’s campaign against the management of Exxon Mobil last year will attest.
But despite increasing activism from investors to bring much-needed ESG integration to corporates, seeing asset managers’ voting record and the outcome of resolutions can be disheartening.
ESG Clarity used ShareAction data of resolutions from 2021 and 2020 and focused on only the six which were explicitly relevant to gender. The wider dataset was used by the group for its 2021 Voting Matters report. Not one of the six motions got a majority, meaning not one passed. The issues at the heart of the resolutions themselves are no brainers – aiming to shrink the gender pay gap and addressing sexual harassment. We asked some of the asset managers with a stake in the companies why they chose to vote against or abstain when they had their say on these resolutions.
| Company | Industry | Proposal | Votes For (%) | Votes Against (%) |
| Intel Corporation | Semiconductors | Report on Global Median Gender/Racial Pay Gap | 14.5 | 85.5 |
| Comcast Corporation | Pay TV | Report on Risks Posed by the Failing to Prevent Workplace Sexual Harassment | 22 | 78 |
| Biogen Inc. | Biotechnology | Report on Gender Pay Gap | 23 | 77 |
| Amazon.com Inc. | Specialty Retail | Report on Gender/Racial Pay Gap | 25.9 | 74.1 |
| Cigna Corp | Health Care Plans | Report on Gender Pay Gap | 32.6 | 67.4 |
| Oracle Corporation | Software – Infrastructure | Report on Gender Pay Gap | 46 | 54 |
All six companies are based in the US where gender pay gap reporting is not yet compulsory. Many of the asset managers said they voted against a resolution on disclosing gender pay gap data because they see sufficient equivalent measures in place already, but others disagreed. For example, Royal London and DWS voted to compel both biotechnology company Biogen and healthcare and insurance company Cigna to report on the gender pay gap, while Invesco and abrdn voted against.
Divided opinions
In the case of abrdn, stewardship director Andy Mason, said the statistics Cigna currently provides on gender representation sufficiently allows shareholders to assess company diversity and inclusion initiatives.
Mason said in the case of Biogen, the company was not only disclosing gender representation levels and diversity and inclusion initiatives, but it has also published targets and outlined various strategies to achieve these.
Meanwhile, Invesco global head of ESG, Cathrine de Coninck Lopez, said voting against these two proposals on gender pay gap was warranted as the information already being disclosed by these companies was “sufficient.”
She also explained the circumstances Invesco would vote against such resolutions.
“Invesco will generally support shareholder resolutions requiring additional disclosure on material ESG risks facing their businesses, provided that such requests are not unduly burdensome or duplicative with a company’s existing reporting.
“However, Invesco may not support such proposals where companies are already providing sufficient disclosures, or where a request is determined to be overly prescriptive.”
What qualifies as sufficient then, seems to evade consensus. However, in one case there was consensus among the four asset managers about what was insufficient – they unanimously voted for software company Oracle to begin gender pay gap reporting.
Yet it was more common to see opinion divided, such as for a resolution for Amazon to report on gender pay gap and racial pay gap within the corporation. In this case DWS and abrdn voted for, Invesco was split while Royal London Asset Management (RLAM) abstained.
| Company | Proposal | abrdn | DWS | Invesco Advisers | Royal London AM |
| Intel Corporation | Report on Global Median Gender/Racial Pay Gap | Against | Against | Against | For |
| Comcast Corporation | Report on Risks Posed by the Failing to Prevent Workplace Sexual Harassment | Against | For | Against | For |
| Biogen Inc. | Report on Gender Pay Gap | Against | For | Against | For |
| Amazon.com Inc. | Report on Gender/Racial Pay Gap | For | For | Split | Abstain |
| Cigna Corp | Report on Gender Pay Gap | Against | For | Against | For |
| Oracle Corporation | Report on Gender Pay Gap | For | For | For | For |
RLAM corporate governance manager, Sophie Johnson, said the resolution was too narrow: “While supportive of the underlying aims of the [Amazon] proposal, RLAM questioned some of the requested detail.
“We would prefer to see a broader range of metrics published, including both mean and median pay gaps, and to cover Amazon’s global operations, rather than a sole focus on median pay gaps, which could be potentially misleading.”
The one resolution to receive opposition from a majority of asset managers was Intel’s which, again, addressed reporting on gender pay gap and racial pay gap. Only RLAM voted for.
Hendrik Schmidt, governance expert at DWS, said the fund group decided Intel’s current measures suffice as it already reports detailed information on its workforce and related pay, publishes EEO-1 data on its diversity website and has a code of conduct in place that states equal opportunity for all applicants and employees.
“Intel also publishes the UK gender pay report due to UK regulation for its UK operations.
“Acknowledging that Intel does not report a gender pay gap statistics for the US or its global workforce as it does for the UK, we regard the substitute [equal pay for equal work] disclosure… in combination with the EEO-1-data and transparency about diversity and inclusion efforts, together with pay equity statistic, as sufficient and thus did not support the proposal in 2021.”
Schmidt pointed to the fact the resolution has been proposed previously, gaining about 15% of support in 2021 and 9% in 2020.
“In case this proposal is filed again in 2022, we will assess the progress made by the company and will evaluate cautiously whether further action deems appropriate,” said Schmidt.
A good start
Mandy Kirby, co-founder and chief strategist at City Hive, said in some cases the resolutions themselves can be a mark of progress, or at least a point from which to move forward, even if they are not passed.
“Generally, resolutions may not pass because investors feel as though they have developed a good underlying relationship with companies and there are conversations in progress that signal the company is prepared to move in the right direction of travel.
“Sometimes, ensuring that companies have a chance to implement measures towards issues that take a longer time to implement can be a better strategy. The resolution being tabled itself shows some progress – now the company will have to be prepared to respond to questions on these topics,” said Kirby.
The outlier resolution in terms of topic was the one brought against telecommunications company, Comcast. It would have compelled the business to “report on risks posed by the failing to prevent workplace sexual harassment”. As previously, the resolution did not pass but did divided opinion among asset managers. Once again, it was abrdn and Invesco against and DWS and Royal London voting in favour.
Abrdn’s Mason said: “In response to allegations of sexual harassment, Comcast Corporation appears to have undertaken a thorough investigation, the final report of which is publicly available, and made the recommended changes to its policy and procedures.
“In the absence of evidence of systemic issues, a vote against this resolution is warranted.”
Applying pressure
Kirby warned investors to be wary of resting on their laurels when investee companies make commitments to change.
“Investors have to be careful not to be satisfied with high-level promises, and if they decide to vote with management they should demonstrate that they nonetheless expect to see progress within a specified period of time.
“We would hope to see targeted resolutions continue to be tabled and over time to see investors get better at asking these questions and companies improving their response to them,” she said.
