Implementation Statement for the Warner Howard Limited Pension and Life Assurance Plan

Covering 1 May 2021 to 30 April 2022

1. Background

The Trustees of the Warner Howard Limited Pension and Life Assurance Plan (the “Plan”) are required to produce a yearly statement to set out how, and the extent to which, the Trustees have followed the Plan’s Statement of Investment Principles (“SIP”) during the previous Plan year, in relation to engagement and voting behaviour, either by or on behalf of the Trustees, or if a proxy voter was used.

This statement should be read in conjunction with the SIP and has been produced in accordance with The Pension Protection Fund (Pensionable Service) and Occupational Pension Schemes (Investment and Disclosure) (Amendment and Modification) Regulations 2018 and the subsequent amendment in The Occupational Pension Schemes (Investment and Disclosure) (Amendment) Regulations 2019.

A copy of the most recent SIP can be found: https://www.phswarnerhoward.co.uk/pension-scheme/

2. Voting and Engagement

The Trustees are keen that their manager is a signatory to the UK Stewardship Code, which they are.

All the Trustees’ holdings are within pooled funds and the Trustees have delegated to their investment manager the exercise of voting rights. Therefore, the Trustees are not able to direct how votes are exercised and the Trustees have not used proxy voting services over the year.

The funds that the Plan invested in over the year were:

Legal & General Investment Management:

  • LGIM All Stocks Gilt Index Fund
  • LGIM Over 15 Year Gilts Index Fund
  • LGIM Investment Grade Corporate Bond Over 15 Year Index Fund
  • LGIM 5 to 15 Year Index-Linked Gilts Index Fund
  • LGIM Over 5 Year Index-Linked Gilts Index Fund
  • LGIM Global Equity Fixed Weights (60:40) Index Fund

The underlined funds are predominantly fixed income and do not hold physical equities and hence there are no voting rights and voting data for the Trustees to report on.

a. Description of Investment Manager’s voting processes

Legal & General Investment Management (LGIM)

LGIM describe their voting process as follows:

“All decisions are made by LGIM’s Investment Stewardship team and in accordance with their relevant Corporate Governance & Responsible Investment and Conflicts of Interest policy documents which are reviewed annually. Each member of the team is allocated a specific sector globally so that the voting is undertaken by the same individuals who engage with the relevant company. This ensures their stewardship approach flows smoothly throughout the engagement and voting process and that engagement is fully integrated into the vote decision process, therefore sending consistent messaging to companies.

LGIM’s voting and engagement activities are driven by ESG professionals and their assessment of the requirements in these areas seeks to achieve the best outcome for clients. Their voting policies are reviewed annually and take into account feedback from clients.

Every year, LGIM holds a stakeholder roundtable event where clients and other stakeholders (civil society, academia, the private sector and fellow investors) are invited to express their views directly to the members of the Investment Stewardship team. The views expressed by attendees during this event form a key consideration as LGIM continue to develop their voting and engagement policies and define strategic priorities in the years ahead. They also take into account client feedback received at regular meetings and/ or ad-hoc comments or enquiries.

LGIM’s Investment Stewardship team uses ISS’s ‘Proxy Exchange’ electronic voting platform to electronically vote clients’ shares. All voting decisions are made by LGIM and they do not outsource any part of the strategic decisions. Their use of ISS recommendations is to augment their own research and proprietary ESG assessment tools. The Investment Stewardship team also uses the research reports of Institutional Voting Information Services (IVIS) to supplement the research reports that they receive from ISS for UK companies when making specific voting decisions.

To ensure their proxy provider votes in accordance with their position on ESG, LGIM have put in place a custom voting policy with specific voting instructions. These instructions apply to all markets globally and seek to uphold what LGIM consider are minimum best practice standards which they believe all companies globally should observe, irrespective of local regulation or practice.

LGIM retain the ability in all markets to override any vote decisions, which are based on LGIM’s custom voting policy. This may happen where engagement with a specific company has provided additional information (for example from direct engagement, or explanation in the annual report) that allows LGIM to apply a qualitative overlay to their voting judgement. LGIM have strict monitoring controls to ensure their votes are fully and effectively executed in accordance with their voting policies by their service provider. This includes a regular manual check of the votes input into the platform, and an electronic alert service to inform LGIM of rejected votes which require further action.”

b. Summary of voting behaviour over the year

LGIM

A summary of voting behaviour over the period is provided in the tables below.

 

Summary Info

Manager name

Legal and General Investment Management

Fund name

Global Equity Fixed Weights (60:40) Index Fund

Approximate value of Trustees’ assets

Disinvested during the Plan year

Number of equity holdings in the fund

2785

Number of meetings eligible to vote

3175

Number of resolutions eligible to vote

39493

% of resolutions voted

99.88%

% of resolutions voted with management

82.85%

% of resolutions voted against management

16.95%

% of resolutions abstained

0.20%

% of meetings, for which you did vote, did you vote at least once against management?

69.45%

% of resolutions voted contrary to the proxy adviser recommendation 

11.74%

c. Most significant votes over the year

Legal & General Investment Management (LGIM)

As regulation on vote reporting has recently evolved with the introduction of the concept of ‘significant vote’ by the EU Shareholder Rights Directive II, LGIM wants to ensure we continue to help our clients in fulfilling their reporting obligations. We also believe public transparency of our vote activity is critical for our clients and interested parties to hold us to account. 

For many years, LGIM has regularly produced case studies and/ or summaries of LGIM’s vote positions to clients for what we deemed were ‘material votes’. We are evolving our approach in line with the new regulation and are committed to provide our clients access to ‘significant vote’ information.

In determining significant votes, LGIM’s Investment Stewardship team takes into account the criteria provided by the Pensions & Lifetime Savings Association (PLSA) guidance. This includes but is not limited to:

  • High profile vote which has such a degree of controversy that there is high client and/ or public scrutiny;
  • Significant client interest for a vote: directly communicated by clients to the Investment Stewardship team at LGIM’s annual Stakeholder roundtable event, or where we note a significant increase in requests from clients on a particular vote;
  • Sanction vote as a result of a direct or collaborative engagement;
  • Vote linked to an LGIM engagement campaign, in line with LGIM Investment Stewardship’s 5-year ESG priority engagement themes.

We provide information on significant votes in the format of detailed case studies in our quarterly ESG impact report and annual active ownership publications.

The vote information is updated on a daily basis and with a lag of one day after a shareholder meeting is held. We also provide the rationale for all votes cast against management, including votes of support to shareholder resolutions.

If you have any additional questions on specific votes, please note that LGIM publicly discloses its vote instructions on our website at: https://vds.issgovernance.com/vds/#/MjU2NQ==/

d. Most significant votes over the year by Fund

LGIM

Below is a sample of the significant votes made by LGIM over the period 1 May 2021 – 30 April 2022 by fund.

LGIM Global Equity Fixed Weights (60:40) Index Fund

Company name

Apple Inc.

Date of vote

2022-03-04

Approximate size of fund's holding as at the date of the vote (as % of portfolio)

0.844551

Summary of the resolution

Resolution 9 - Report on Civil Rights Audit

How you voted

For

Where you voted against management, did you communicate your intent to the company ahead of the vote?

LGIM publicly communicates its vote instructions on its website with the rationale for all votes against management. It is our policy not to engage with our investee companies in the three weeks prior to an AGM as our engagement is not limited to shareholder meeting topics.

Rationale for the voting decision

Diversity: A vote in favour is applied as LGIM supports proposals related to diversity and inclusion policies as we consider these issues to be a material risk to companies.

Outcome of the vote

53.6%

Implications of the outcome eg were there any lessons learned and what likely future steps will you take in response to the outcome?

LGIM will continue to engage with our investee companies, publicly advocate our position on this issue and monitor company and market-level progress.

On which criteria (as explained in the cover email) have you assessed this vote to be "most significant"?

LGIM views gender diversity as a financially material issue for our clients, with implications for the assets we manage on their behalf.

 

Company name

Microsoft Corporation

Date of vote

2021-11-30

Approximate size of fund's holding as at the date of the vote (as % of portfolio)

0.806019

Summary of the resolution

Elect Director Satya Nadella

How you voted

Against

Where you voted against management, did you communicate your intent to the company ahead of the vote?

LGIM publicly communicates its vote instructions on its website with the rationale for all votes against management. It is our policy not to engage with our investee companies in the three weeks prior to an AGM as our engagement is not limited to shareholder meeting topics.

Rationale for the voting decision

LGIM expects companies to separate the roles of Chair and CEO due to risk management and oversight

Outcome of the vote

94.7%

Implications of the outcome eg were there any lessons learned and what likely future steps will you take in response to the outcome?

LGIM will continue to vote against combined Chairs and CEOs and will consider whether vote pre-declaration would be an appropriate escalation tool.

On which criteria (as explained in the cover email) have you assessed this vote to be "most significant"?

A vote linked to an LGIM engagement campaign, in line with the Investment Stewardship team's five-year ESG priority engagement themes