Voting-related, structural engagement

In our experience, voting is straightforward at roughly 80% of companies and votes are cast in favour of management. For the other 20%, identified by the review of proxy research and further research, it is necessary to engage – speak, meet, or correspond – with the company about voting issues to ensure that votes are cast intelligently and that the company better understands share owners’ concerns and undertakes changes that enable us to recommend a vote with management in the future. The structural issues of concern include the quality of disclosure, executive remuneration, board processes, succession planning, corporate social responsibility, and internal controls and risk management. The 80:20 principle applies again here in that the engagement with most companies is normally productive. For the 20% where that is not so, the engagement will continue or the company will be included in GO’s strategic engagement programme.

 

Strategic engagement

Strategic engagements take more time and involve the more senior members of GO’s team. As with the GO European Focus Fund, the engagements tend to centre on the more strategic or value-orientated aspects of how a company is run, such as capital structure and financing, strategic direction, board composition and calibre. Those leading the strategic engagements are experienced business executives who have credibility at public company board level.

In general, the objective is to achieve for clients a notional return on the strategic engagement programme that exceeds the cost of the service.