Sustainability / Engagement Policy
In English
Our view is that a well-run company is a company that respects international agreements and norms, in terms of human rights, working conditions, the environment and corruption. The most important starting points for our corporate governance principles are sustainability, transparency, and the promotion of good governance. The principles apply primarily to listed share investments, but also to other investments where applicable. Our goal is to support companies to achieve success and achieve their goals. Through this, we secure and increase our clients’ investment returns in the long term.
Our view is that a well-run company is a company that respects international agreements and norms, in terms of human rights, working conditions, the environment and corruption. The most important starting points for our corporate governance principles are sustainability, transparency, and the promotion of good governance. The principles apply primarily to listed share investments, but also to other investments where applicable. Our goal is to support companies to achieve success and achieve their goals. Through this, we secure and increase our clients’ investment returns in the long term.
Our asset management is based on long-term investments. The cornerstone of our investment philosophy is a thorough analysis and knowledge of the companies and their sustainability policies. Active ownership and corporate governance support the achievement of WIP’s long-term investment goals. The most important ways to exercise active ownership are meetings with the companies’ management, participation in general meetings and influence on the companies in collaboration with other investors.
By initiating dialogue with companies, we invest in, we can influence the companies positively to develop and improve their sustainability work. The dialogue can take place directly through us or in collaboration with other investors. More detailed guidelines for WIP’s principles for responsible investing are available on our website (here)
When selecting a company, we conduct a fundamental, so-called bottom-up analysis, where we evaluate the company’s quality and potential for value creation. Important factors we consider are the company’s market position, market growth, management and corporate governance, profit and loss history, balance sheet and environment, and social responsibility. With our long experience, we have established that only companies that act responsibly manage to be successful in the long run.
We receive information about the companies, e.g. from the companies’ self-produced reports such as profit reports, annual reports and social responsibility reports, at the companies’ events aimed at investors and from analysis databases. The most important source of information is the regular discussions with the management of the companies. During the discussions, issues that are essential to the company’s success are discussed, such as the company’s strategic goals, future opportunities and challenges, and sustainability.
We are also, if necessary and considering the value of the client’s holdings, in direct contact with the management and board of directors of the listed company regarding matters that fall to the general meeting, especially in cases where we oppose a proposal on the agenda. In cases where we oppose the Board’s proposal, we strive to discuss the matter with management and clarify our position. Taking the situation into account, we can also bring the matter to the general meeting or ask for a vote. We may also participate in shareholders’ joint influence projects to develop or change the company’s operations.
Participation in general meetings is a way to exercise active ownership and influence on the companies. We attend general meetings in the name of the asset management clients who have authorized us to vote in their place in accordance with the principles of corporate governance. We can also attend general meetings of the companies that funds managed by us are invested in, authorized by the fund management company. We apply our voting policy to both investments in Finland and abroad.
Our voting policy follows the principles of the Securities Market Association’s Corporate Governance.
Our voting policy is based on internationally recognized principles and recommendations on good governance such as the OECD and International Corporate Governance Networks (ICGN) principles of good governance. In addition, we always consider national legislation and regulation as well as local market standards and corporate governance principles.
Amendments to the Articles of Association. We generally vote against amendments to the Articles of Association in all cases where the amendment may lead to a weakening of shareholders’ rights.
The auditors. Suspicions may arise about the independence of auditors if the auditors are used for non-audit services (e.g. to taxation services) whose fees are higher than those paid for the audit services. We are therefore voting against proposals on auditors’ fees and against the auditors’ re-election, if we become aware that fees other than the audit remuneration are unreasonably higher than the fee paid as audit remuneration and if this has been going on for several years in a row without there being any justifiable reason for it. Companies shall conduct a tendering procedure for the company’s auditors’ association at least once every ten years. We recommend that an association of auditors be used for a maximum of ten years.
Dividend payment. We are voting against a dividend proposal if the dividend payment is deemed unreasonable considering the company’s financial situation.
Approval of the financial statements. If the financial statement is published in a timely manner and if an auditor’s report has been attached to the financial statements without remarks, we vote to approve the financial statement.
Share issue power of attorney. When voting a power of attorney for an issue, we make an analysis of the impact of a new share issue on the company before we decide how we vote. We believe that a share issue power of attorney that does not contain a directed share issue and that is no more than 20 percent of the company’s share capital can be approved as a starting point.
Share repurchases. As a rule, we vote for the repurchase of own shares if the value of the repurchase is no more than 10 percent of the value of the issued shares. We can vote against share buybacks, partly because of local market regulation.
Preferred shares. We can vote against the issuance of preference shares that entitle extra dividends, as this may jeopardize shareholder equivalence and adversely affect the dividend yield of the existing stock series.
Voting rights of the shares. We believe that the “one share one vote”-principle is important to follow. We therefore generally vote against proposals that could lead to a weakening of the voting rights of minority owners.
The number of members of the Management Board and the composition of the Management Board shall enable the Board’s tasks to be carried out efficiently. Persons elected to the Management Board shall be sufficiently competent and have sufficient time to perform their duties. According to us, an effective and diverse board has representatives from both sexes as well as people with different experiences, backgrounds, roles, and people of different ages. We believe that the board’s committees are important for the board to be kept up to date and for the company to be able to be monitored effectively.
Discharge. As a rule, we vote for the Board’s discharge from liability and are in contact with the company in advance if we vote against the Board’s discharge from liability. We vote against the Board’s discharge only if we have reliable information about substantial and significant concerns related to the Board’s failure to comply with its obligations.
The independence of the Management Board and committees. We wish that the majority of the board members and members of the committees are independent of the company. If the majority is not independent, we vote against the election of a new dependent member. In addition, we wish that at least two of the company’s independent board members are independent of the company’s significant shareholders.
The length of the mandate of the members of the Board of Directors. In view of the circumstances, we are voting against proposals for the re-election of a member of the Board of Directors whose term of office has lasted longer than provided for in the legislation, the Articles of Association or what the local Code of Corporate Governance recommends. We vote for the re-election of such a board member, among other things, if it is necessary for a functioning board to be elected.
Functioning on many boards. We believe that a board member must have sufficient time to perform his or her fiduciary duties. We are therefore voting against the election of a board member who serves on an unreasonable number of boards. When voting, we follow what the local legislation or the local code of corporate governance stipulates or recommends about how many boards a board member can participate.
Participation activity. Companies shall report on the participation activities of individual board members. If a board member’s participation activity has been less than 75 percent at board meetings and committees, the company shall provide an acceptable reason for doing so. If a board member holds many other fiduciary duties the participation activity highlights the person’s opportunity to participate in the work of the board.
Distribution between the Chairman of the Board and the CEO. As a rule, we vote against the merger of the posts of Chairman of the Board and Chief Executive Officer. In addition, we believe that the CEO should not, as a rule, be elected to the company’s Board of Directors.
The board’s reaction to shareholders’ initiatives. We may vote against members of the board of directors or committees if the board of directors has not acted regarding such a shareholder initiative that was supported by the majority of shareholders during the previous general meeting.
The committees of the Board of Directors. The members of the Committees shall have the expertise and experience required for the task. We recommend that the Board of Directors establish a Remuneration and Nomination Committee. The majority of the members of the Remuneration and Nomination Committee shall be independent of the Company. We believe that the CEO or another person belonging to the rest of the management should not be elected to the Remuneration or Nomination Committee.
We advocate a remuneration policy for the company’s management that harmonizes the objectives between the company’s management and the owners. The remuneration of an external member of the Board of Directors shall be arranged separately from the remuneration of the active management.
We believe that remuneration should be based on pay-for-performance, and we emphasize the creation of long-term ownership value. There is always a reason to vote against pay-for-failure compensation. If there are serious and actual contradictions with the company’s business activities, restrictions shall be placed on the payment of performance payments to show that the situation is considered.
We believe that companies should maintain an independent and effective remuneration committee that helps prevent rewards for weak performance.
WIP Minimum Terms and Conditions. We have specified a group of minimum conditions for performance-based remuneration. We generally vote against compensation schemes that include:
Payments upon termination. We generally vote against payments for redundancy and change-of-control if the remuneration is more than 100% of the basic salary or higher than the local market practice stipulates.
The ratio of the fixed annual salary to the performance allowance. If the European Capital Requirements Directive (CRD IV) is applied to the company, the shareholders’ vote regarding the largest possible gap between the annual salary and the performance-based remuneration is binding on the company. We generally vote for the performance-based remuneration to be no more than 100% and vote against proposals where the performance-based remuneration is above 100% of the fixed annual salary.
The shareholding of the executive management. We promote remuneration where the executive management receives a part of its total compensation in the company’s shares. However, we do not approve of the company lifting corporate loans to finance the purchase of shares to management.
Company acquisitions and mergers. We always vote according to the circumstances of company acquisitions and mergers. The justifications for the financing and strategy of the proposals are reviewed together with the portfolio manager who follows the company. In the analysis, we also consider how the rights of minority owners are safeguarded, possible conflicts of interest and how the principles of good governance are fulfilled after the transaction.
Mechanisms to stop company takeovers. We usually vote against mechanisms to stop company takeovers, especially at times when shareholders’ rights and opportunities for acquisitions or mergers may be jeopardized.
Related party transactions. We pay extra attention to related party transactions and always consider the basis of the transaction.
In many countries, shareholders have the right to add matters to the general meeting’s agenda.
Initiatives on social and environmental responsibility and good governance. Our focus areas in sustainable investment are sustainable development and climate change. Important topics related to the companies include labor and human rights, health, climate change and the environment. We pay extra attention to proposals by shareholders that address these issues.
Minimum requirements. We generally vote against the shareholder’s proposal in situations where the proposal can be considered too governing, unreasonably laborious (e.g. too short a deadline) or impossible to fulfill taking into account the company’s day-to-day business activities.
Sustainable development as an indicator. We are happy to vote in favour of proposals where sustainable development is set as an indicator for remuneration policy.
Political contributions. We are happy to vote for shareholders’ initiatives aimed at increasing the company’s communication and transparency regarding the company’s political contribution.