As
part of the SBA’s mission to invest, manage, and safeguard the assets of its
various mandates, the SBA plays a vital role in supporting initiatives to
ensure that public companies meet high standards of independent and ethical
corporate governance. The SBA acts as a strong advocate on behalf of FRS
members and beneficiaries, retirees, and other clients to strengthen shareowner
rights and promote leading corporate governance practices at U.S. and
international companies in which the SBA holds stock.
The
SBA’s governance philosophy encourages companies to adhere to responsible,
transparent practices that correspond with increasing shareowner value and to
appropriately consider the input of their shareowners. The SBA’s corporate
governance activities are focused on enhancing share value and ensuring that
public companies are accountable to their shareowners with independent boards
of directors, transparent disclosures, accurate financial reporting, and
ethical business practices designed to protect the SBA’s investments.
During
fiscal year 2020-21, SBA staff cast votes at 10,174 companies worldwide, voting on ballot items including
director elections, audit firm ratification, executive compensation plans,
mergers & acquisitions, and a variety of other management and shareowner
proposals. These votes involved 98,796 distinct voting items—voting 80.3% “For’’ and 16.6% “Against”, with the remaining 3.1% involving abstentions. Of all votes cast, 17.5 percent were “Against” the management-recommended-vote.
SBA proxy voting was conducted across 76
countries, with the top five countries comprised of the United States (2,965 votes), China (1,523), Japan
(893), United Kingdom (365), and India (330). The SBA actively
engages portfolio companies throughout the year, addressing corporate governance
concerns and seeking opportunities to improve alignment with the interests of
our beneficiaries. Highlights from the 2021
proxy season included the continued focus on environmental and social
topic proposals by investors, efforts to improve board diversity, and critical
voting on the level of executive compensation.
In
addition to proxy voting, the SBA actively engages companies it invests in
throughout the year, at times maintaining a year-round dialogue and analysis of
corporate governance issues and other reforms. Engagement by investors
can be a very effective way to advocate for positive changes and improve
reporting by the companies in which the SBA invests. Improved corporate
disclosures are a key objective of SBA engagement, as transparent and improved
comparability can help all shareowners make better investment decisions. The
SBA’s corporate engagement activity addresses corporate governance concerns and
seeks opportunities to improve alignment with the interests of our
beneficiaries. The SBA’s Corporate Governance unit prepares a separate annual
report detailing its activities and additional reports on corporate governance
topics covering a wide range of shareowner issues. Historical
information, including prior reports, can be found within the governance
section of the SBA’s website, available at
www.sbafla.com.