Liontrust engagement and voting report 2021 - Flipbook - Page 14
Other engagement examples
In 2021, we followed up on our voting to request changes. Many of
these engagements focused on board and committee compositions and
encouraged increased diversity.
One example is RWS, which is held by the Economic Advantage
team. We voted against the Chair of the board as he was a
member of the remuneration committee, which is not considered
best practice. Following our engagement with the company, the
Chair stepped down from the remuneration committee.
During 2021, there were high-profile private equity takeovers of
two of our large cap holdings – Morrisons and Aggreko – and
Liontrust engaged with the Chair of each company to discuss the
terms of the takeovers. Initially, Liontrust felt both companies were
undervalued by the first offers. In the case of Morrisons, the bidding
war drove up the price to a point where the Economic Advantage
team was happy to support it. With Aggreko, the team believed
the price did not take account of the role the company would have
in the energy transition and therefore voted against the acquisition
following several discussions with it.
Remuneration
Liontrust was involved in 32 engagements relating to remuneration in 2021.
In one interaction, Liontrust advised the Intertek Chair that we would
not support the remuneration resolution at the AGM if it were going
to take five years to align the CEO’s pension contributions with
those of the workforce. We were not satisfied with the response
and we voted against across both the Economic Advantage and
Sustainable Investment teams’ holdings.
CASE STUDY
Abcam – remuneration (Sustainable Investment team)
As a top 20 shareholder, the Sustainable Investment team was
consulted about a proposed new long-term incentive plan for the
CEO and Senior Management and the team said the plan was too
generous. The company appeared to be trying to compensate for
perceived failings around what the CEO received historically but,
in principle, the team believed this was the wrong approach: the
past was the past and companies should not attempt to reward
people with easy targets in the future because of this.
Although the Sustainable Investment team understood there
was global competition for talent, making the US the correct
comparison, the team still thought the level of incentive was too
high. The peer group used was not immediately disclosed in the
14 - Liontrust: Engagement and Voting Report 2021
proposal document nor was it clearly explained, containing an
eclectic mix of new founder-led businesses and significantly larger
organisations. The team believed CEOs and individuals should be
incentivised and well rewarded for good performance but it was
not reassured by the plan. The team downgraded its management
quality rating for the company and reduced its position.
For 2022, the Sustainable Investment team has committed to looking
more closely into the topic of remuneration and, more specifically, its
link to increasing income inequality. While we believe management
needs to be incentivised correctly, pay quantum and the appetite for
companies to keep reviewing pay to be aligned with the top quartile
in their sectors represents a longer-term systemic issue.