At Nordea we believe that sound corporate governance contributes to shareholder value and adds value to equity investments. This is in line with the purpose of our investment funds – to create value for our unit holders. As the largest portfolio manager in the Nordics, we are able to use our active ownership power efficiently and responsibility to act on behalf our unit holders and towards the companies we invest in.
Below is a summary of Nordea´s proxy voting that during the first half of 2024 as well as some engagement examples. In order to put these numbers in perspective, voting and engagement statistics from 2023 and 2022 are also presented. We publish all of Nordea’s voting on our voting portal. https://www.nordeafunds.com/en/responsibility/votingportal.
Katarina Hammar
Head of Investment Stewardship, Nordea Asset Manangement
Capital mandates
We notice no significant changes in the field of capital mandates brought to the general meetings. Companies tend to ask for mandates of issuing, repurchasing, re-issuing of shares to the same extent as before. Nordea continues to vote in favour of such mandates if they are limited in time and scope. A change this year is that we support, repurchase of shares even with a longer mandate than 18 months as it is deemed to be in the best interest of our unitholders.
Case: Kerry - Authorize issue of equity without pre-emptive rights
Kerry Group increased the Boards authority to issue shares without pre-emptive rights from 5% + 5% for specified capital investment to 10+10% t, which is above our expectations on maximum 10% in total. Normally we would not support such an increase, but in a pre-AGM meeting where we expressed our concern about potential dilution for existing shareholders, Kerry’s corporate secretary explained that the increase was a technical adjustment to local standards and the Board has no intention of using the authority. The company secretary also agreed to consider to change it back to 5% + 5% in 2025.
Compensation
We see that the remuneration reports as well as the policies still lack transparency and clear and tangible financial and ESG metrics. This makes the analysis of these programmes difficult for shareholders. We are, however, pleased to see that more and more companies include ESG-metrics in their incentive programmes. These metrics are more common in the short-term programmes rather than in the long-term, which is where we prefer to see them. The inclusion of ESG-metrics in incentive programmes is still new for many companies, and we can see that they struggle to find relevant qualitative KPI´s which includes a stretch in performance in them.
We also see that the so-called time-based elements in incentive programmes remain especially in the US. Nordea favours incentive programmes with clear performance metrics, motivating the employees to make that extra effort, rather than the “heart-beat” elements where one only needs to be continuously employed. The new demands on companies to deliver sustainability reporting has led to an increase in the compensation of many audit committee members of many companies.
Case: Millicom
Millicom’s Chair of the Board and Chair of compensation and presented their new management compensation plan to us. We were not able to support the proposal since we prefer the performance-based LTI awards as they had in their old plan. We expect compensation plans to link to individual and company performance criteria (financial and ESG), encouraging long-term share ownership. We appreciate the transparency and their ask for shareholder feedback, but would like to see a reduction/removal of Restricted Stock Units. We also fail to understand how this plan aligns with shareholders since there are many factors impacting the share price performance and also considering the risk of short term behavior and business ethics and other risks.
Board composition
It is clear that more and more companies value the input of shareholders, not only in owner-led shareholder nomination committees (where Nordea participate to large extent), but also in direct dialogues with the companies. When it comes to board skills and competence the focus this year is more on AI and cyber security, and less on specialists on the board. We also see proxy advisors are more likely to recommend against board members if for example board oversight of material social and environmental issues are not anchored in governing documents or if there is a lack of board diversity. The number of companies with no women on the board is declining, but not fast enough to meet our expectations.
Case: Company X
A sustainability expert was elected to the board two years ago, but this failed to provide any value added and nothing already covered in business operations. Board evaluation and interviews came to the conclusion to replace this board member with a board member with sector and private equity experience to focus. on financial and sustainable value creation.
Shareholder rights
Digital annual general meetings are becoming more and more common. Nordea vote in favour of management proposals to amend articles of associations to allow for so-called virtual only meetings as long as all shareholders rights are protected.
In December 2023 Nordea co-filed two shareholder proposals:
One was for Amazon’s 2024 AGM asking the board to Commission Third Party Assessment on Company's Commitment to Freedom of Association and Collective Bargaining. In April 2024 we also co-filed an Exempt Solicitation with the SEC urging shareholders to support the proposal. The proposal received 31.8%
The other was a shareholder proposal for Exxon’s 2024 AGM requesting that the Board of Directors issue a tax transparency report to shareholders, at reasonable expense and excluding confidential information, prepared in consideration of the indicators and guidelines set forth in the Global Reporting Initiative’s (GRI) Tax Standard. In March 2024 the SEC ruled that Exxon may exclude our tax transparency shareholder resolution on “ordinary business” grounds. Exxon excluded the proposal.
We continue to see a high number of ESG related shareholder proposals.
Case: Viaplay
We decided to vote against discharge of the previous CEO in Viaplay and we also made a statement at the AGM. We did this together with a majority of the shareholders at the AGM to give the new Board a possibility to evaluate potential charges against the previous CEO. Our assessment after continuous dialogue with management, the Chair and also with the company auditor and legal experts was that the board did act on the negative development in the company. The auditor recommended for discharge of the Board and the previous and sitting CEO. There is now a new CEO and a recapitalization program in place.
Report for the voting season 2024
Here you can find the report for the voting season 2024, including voting statistics.
Voting season 2024