Shareholders can be crucial in pushing companies towards better sustainability practices and transparency by voting on issues such as board composition and executive compensation. We believe positive action includes taking an active role at annual general meetings and challenging management proposals as part of a constructive dialogue with the companies we invest in, writes Michael Herskovich.
BNP Paribas Asset Management maintained its firm voting approach in the 2024 season of annual general meetings: we opposed 36% of all resolutions, matching the rate in 2023.
While transparency and practices are improving, we continue to raise our expectations for the companies in which we invest. We voted against more than one in two resolutions on executive compensation, mostly due to the short-term orientation of many such plans, a lack of transparency, or compensation level that was not justified by performance.1
A focus on executive compensation
We expect all companies to integrate environmental or social indicators into executive pay, including a climate indicator. This year, we added the requirement to include a climate component for companies in sectors such as energy, utilities and materials, and for companies that are among the higher greenhouse gas emitters. We will extend this requirement to all companies by 2026.
Integrating a climate component is becoming more common, particularly in Europe but less in the US: three quarters of our votes in opposition to executive pay proposals over the absence of a climate component involved North American companies.
For us to support a remuneration proposal, such criteria must be measurable, quantifiable, and relevant to the company’s sustainable development strategy.
