Sanlam Investment Managers falls in line on voting transparency
Ten years after SA's largest fund manager, the Public Investment Corporation, shook up the investment community by disclosing details of how it votes at company annual shareholder meetings, Sanlam Investment Managers (SIM) has finally fallen into line with what’s become the industry standard at a time when disclosure requirements are set to be beefed up.
SIM, which manages over R400bn in investments, is one of the largest asset managers in the country. All of its major competitors — including Allan Gray, Coronation, Investec, Old Mutual and Stanlib — have been disclosing voting details for years.
SIM is a signatory of the Code for Responsible Investing in SA (Crisa), which was set up in 2012 to create an effective governance framework for institutional investors.
Governance of the powerful investment institutions has come under the spotlight following the Steinhoff scandal, which resulted in the destruction of R200bn of investment value and caused reputational damage to many of the big fund managers.
In a consultation paper released in September, the JSE called on all the role players within the broader financial market ecosystem to consider their roles in addressing the concerns of the investment community. The JSE paper asks whether large shareholders should be required to vote on every resolution at a shareholders’ meeting and publish how they voted on Sens.
The suggestion develops recommendations set out by Crisa in 2012.
Principle 5 of the code recommends “public disclosure of full voting records”. Principle 5 of the code also states: “If an institutional investor does not apply some or any of the principles or recommendations in Crisa or applies them differently from how they are set out, it should in a transparent manner explain the reasons and the alternative measures employed.”
No explanation for its ongoing deviation from Crisa recommendations was provided until the Sanlam annual general meeting (AGM) in June, when the board was challenged on the issue by shareholder activist Theo Botha.
Botha asked Sanlam chairman Johan van Zyl why SIM did not make its voting record public as its major competitors did and as recommended by Crisa. Van Zyl told shareholders they would “definitely look at” bringing the disclosure into line with the major players.
SIM CEO Robert Roux queried the meaning of “making public”.
“Does it mean informing the whole world?" he asked.
“We’ve decided to be transparent to the right people, who are our clients and on whose behalf we manage investments,” said Roux, who explained that the voting record by individual companies was given to Sanlam’s relevant clients. However, he told Botha the disclosure issue “is not something we can’t discuss”.
Botha welcomed the latest development, which brought SIM into line with Crisa. “It’s disappointing that they only changed it after I attended the AGM and raised the issue. But why have they not informed the investment community and explained why they decided to change their approach?”
Voting details for the three months to end-June show SIM is in line with its industry peers. It has voted against about 5% of resolutions, mainly those relating to remuneration and giving the board authority to issue shares for cash.
The next quarter’s results will reveal how SIM voted at one of the highest-profile AGMs on the SA corporate calendar, the Naspers AGM. In August, 60% of N shareholders voted against the controversial remuneration policy. Sanlam is a significant holder of Naspers’s listed N shares as well as its high-voting unlisted A shares. One hundred percent of Naspers A shareholders voted in support of the remuneration policy.