In accordance with its founding documents, the FRR’s voting rights are exercised by the asset managers it has selected and in the FRR’s sole interests.
The guidelines on the exercise of voting rights incorporate all of the elements specific to the FRR but must be sufficiently wide to also account for jurisdictional particularities (both in France and internationally). The FRR’s aim is to capitalise on managers’ knowledge and ability to respect the practices in force in the various financial markets. Managers may also have regard to these local practices on matters that are not covered by the FRR’s voting guidelines.
To assist monitoring, the FRR is in the process of rating the quality of governance of its developed market equities portfolio. This new and analytical approach enables the FRR to better understand the essential components of governance of this portfolio. This process, conducted through its active managers, has in 2022 enabled it to participate in 1511 shareholder general meetings and to vote on more than 20,000 resolutions in the countries comprised in its developed markets equities portfolio. Its managers took part in 98% of voting general meetings.
The FRR’s Managers voted on resolutions proposed by management at general meetings at a ratio of 78.7% FOR and 21.3% AGAINST.
In 2022, disagreements over director appointments increased significantly, from 12% of votes against resolutions presented by management to 31%. Resolutions on compensation accounted for 23%, down from 27% in 2021.
Note also a significant number of resolutions on exceptional executive compensation and climate, diversity and inclusion. Resolutions on “Say on Climate” continued to rise: 55 companies submitted resolutions on this topic (vs 11 in 2021). Shareholder demands translate into a level of support that tends to decrease.
The FRR pays close attention to the factoring in of extra-financial aspects, particularly social, societal and environmental, by boards of directors, to consideration of the recommendations of the TCFD and diversity not only on boards of directors, but also within the executive committees of the companies of which it is a shareholder.