SNAPSHOT2 min read

Video: Are people a company’s greatest asset? Part 3

Our predictions for voting season.

03-03-2023
Photo of shareholders voting

Authors

Angus Bauer
Head of Sustainable Research
Katie Frame
Active Ownership Manager ESG
Vicki Owen
Senior Content Strategist

Vicki Owen (VO): “How do you expect the issue of human capital management to come up this year as we get into peak proxy voting season?”

Katie Frame: “Probably in two main ways, the first one being around how we think about executive compensation and how the most senior people within the organisation are compensated, and how that might compare to the compensation structures and practices for the broader workforce.

“So what we’re looking at very carefully this year is ensuring that CEOs, other executives, aren’t receiving pay increases that are not consistent with the wider workforce. We wouldn’t want to see a CEO getting a pay increase that’s greater than the average for the workforce.

“If anything, we would like to see more restraint being applied and actually organisations thinking about should the CEO receive a lower pay increase, particularly relative to the lowest paid workers within the workforce, which are perhaps, as we talked about, most impacted by the current cost of living crisis.

“But again, it’s not just around the base pay. We also look at things like pensions, particularly in the UK. So what are the pension contributions that companies are offering?

“I guess the second key way that human capital is going to be coming up during AGM season is through shareholder resolutions. We set out a new framework for how we assess shareholder resolutions and so we’ll be applying that this year. It really comes down to what the resolution is asking for, but also what’s our engagement history with the company as well, because it might be that actually we think we can achieve more through the engagement dialogues that may be ongoing with the company, rather than necessarily supporting resolutions. So each one is looked at really on a case-by-case basis.”

VO: “And I imagine there’s a lot of client interest in this area as well driving this activity.”

Angus Bauer: “You would be hard pushed I think to find a fundamental investor that if he or she is invested in a company where they haven’t thought about the strength of the company, the quality of the management team, the reliability of delivery.

“And all of these things are rooted in human capital management, you see. So we have definitely some sort of cyclical issues that are driving the interest, the Great Resignation, we’ve got structural issues that are driving the interest in this subject, we’ve got clients, but fundamentally, there is an investment relevance to this that is driving investor appreciation and interrogation of this question.”

VO: “Great. Well, thank you very much. Well, it’s a lot to keep track of for you both and I look forward to following the developments in this area with you.”

Subscribe to our Insights

Visit our preference center, where you can choose which Schroders Insights you would like to receive

The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.

Authors

Angus Bauer
Head of Sustainable Research
Katie Frame
Active Ownership Manager ESG
Vicki Owen
Senior Content Strategist

Topics

Please consider a fund's investment objectives, risks, charges and expenses carefully before investing. The Schroder mutual funds (the “Funds”) are distributed by The Hartford Funds, a member of FINRA. To obtain product risk and other information on any Schroders Fund, please click the following link. Read the prospectus carefully before investing. To obtain any further information call your financial advisor or call The Hartford Funds at 1-800-456-7526 for Individual Investors.  The Hartford Funds is not an affiliate of Schroders plc.

Schroder Investment Management North America Inc. (“SIMNA”) is an SEC registered investment adviser, CRD Number 105820, providing asset management products and services to clients in the US and registered as a Portfolio Manager with the securities regulatory authorities in Canada.  Schroder Fund Advisors LLC (“SFA”) is a wholly-owned subsidiary of SIMNA Inc. and is registered as a limited purpose broker-dealer with FINRA and as an Exempt Market Dealer with the securities regulatory authorities in Canada.  SFA markets certain investment vehicles for which other Schroders entities are investment advisers.

For illustrative purposes only and does not constitute a recommendation to invest in the above-mentioned security/sector/country.

Schroders Capital is the private markets investment division of Schroders plc. Schroders Capital Management (US) Inc. (‘Schroders Capital US’) is registered as an investment adviser with the US Securities and Exchange Commission (SEC).It provides asset management products and services to clients in the United States and Canada.For more information, visit www.schroderscapital.com

SIMNA, SFA and Schroders Capital are wholly owned subsidiaries of Schroders plc.