Liontrust Sustainable Investment Annual Review 2022 - Flipbook - Page 39
Shareholder resolutions
As long-term, active and responsible investors we encourage
companies to report on social and environmental issues that are
pertinent to their businesses. Rather than support all social and
environmental resolutions, each shareholder proposal is considered
on a case-by-case basis.
During the period, for positions held by the Sustainable Investment
team:
• There were two companies held in the funds that had management
resolutions that related to environmental proposals; one to approve
a Climate Transition Plan and the other to approve a Climate
Strategy. The team supported both of these resolutions.
• One company had a shareholder proposal for all the funds
management by the team that related to Lobbying payments,
which the team supported.
Case study: Engaging on remuneration – Cellnex Telecom S.A.
At
the
company’s
2022
AGM, we voted against the
remuneration policy. We felt this
was warranted because the board introduced a booster element
under the 2022-2024 Long Term Incentive Plan (LTIP), and the
triggers for the booster did not appear to be sufficiently aligned
with potential shareholder experience. In addition, the size of the
boosted long-term incentive awards for the CEO stood well above
the market standards.
We gave Cellnex our feedback after the remuneration policy
was not approved by shareholders. We asked what prompted
the change in policy, why it was approved so quickly and what
the process was. We raised our concerns and highlighted the
importance of its board’s ability to remain strong and independent
and not vulnerable to senior management influence.
We discussed and welcomed the various improvements the
company is making. These include exceptional one-off awards
no longer being allowed, improvements in non-exec board fees,
contract terms (CEO non-compete indemnity), exec annual bonus
and a capped pay out of overachievement as % of salary.
The LTIP now includes four performance areas: ESG (20%),
recurring FCF per share (20%), total shareholder return (30%) and
market comparable TSR (30%). We communicated our thoughts
on how sufficiently stretching these now looked with a lower share
price, and discussed the peer group for the last metric.
Cellnex is trying to make pay for better performance more
widespread for 225 employees across the company (around 10%
of staff). We discussed the rationale for needing to better incentivise
this group of staff, which included getting on the front foot when it
came to an increase in competition for talent.
Liontrust Sustainable Investment: Annual Review 2022 - 39