If you’re saving in a pension, stocks and share ISA or unit trust you’ll be holding money in one of our funds. Most of these funds buy and sell shares in companies on stock markets. Owning shares in a company means you’re a part-owner of that company.
We use a Fund Manager to do this buying and selling. With our Climate Change Fund the Fund Manager picks the companies they buy and sell. With our other funds, which track a stock market index (like the FTSE All-Share Index), the Fund Manager doesn’t pick and choose individual companies themselves – they just follow the index.
Whichever way the buying and selling is done, owning shares in a company brings with it responsibilities – to that company’s customers and employees, the environment, and society in general.
Our Fund Managers can engage directly with these companies and vote as a shareholder on behalf of Virgin Money and the fund you’re invested in. What they do and how they vote is based on a set of principles (called their Engagement Policy) which we check are aligned with our principles and are in the best interests of the fund and you – the customers who invest in our funds.
For our Climate Change Fund, the Fund Manager is MAN GLG. PDF link opens in a new window For our other funds, it’s Aberdeen Standard Investments. PDF link opens in a new window Select the company name to read their policies for how they invest and engage with companies.
We’ll also show how it’s working for real below. For example, we’ll share how our Fund Manager votes on significant shareholder issues where the fund is a sizeable shareholder in that company. This list will be updated each year.
With regard to the two Virgin Money funds that invest directly in the shares of companies, the tables below show some of the votes cast during 2020 that were contrary to the recommendation of the Company concerned. The tables show votes ranked by the ten largest companies in each fund where contrary votes were made.
| Position | Company | Matter voted on | Vote direction recommended by Company | Vote direction taken | Reason |
|---|---|---|---|---|---|
| 1 | Astrazeneca | Approve Remuneration Policy | For | Abstain | We had concerns regarding the misalignment of executive pensions with the wider workforce. However, in recognition of the work the company is doing in relation to Covid-19 we abstained this year but will vote against the remuneration report in 2021 should this still be in place. |
| 2 | GlaxoSmithKline Plc | Approve Remuneration Policy | For | Against | The Long Term Incentive Plan (LTIP) used by the company allows a high level of vesting for the achievement of only threshold performance. Given that the company has reviewed its policy without addressing this issue we considered a vote against the new policy to be appropriate. We were also aware that the grant size under the LTIP is being increased this year alongside a significant salary rise. In addition, we were aware that the UK executive directors are to reduce their pension contribution rate to the staff rate over the next two years. However, a US executive will remain on a rate of 38% and there was no compelling justification provided for this. |
| 3 | Reckitt Benckiser Group Plc | Approve Remuneration Policy | For | Against | We have had long standing concerns about the high quantum and LTIP structure. |
| 4 | RELX Plc | Approve Remuneration Policy | For | Against | We have voted against the Remuneration Committee members and remuneration resolutions in recent years. However, there has been a change of tone and some other constructive changes and we therefore considered it appropriate to support the Remuneration Committee members and the Remuneration Report. We do, however, still have an issue with the long term incentive structure as it allows a high level of vesting for threshold performance, so we therefore voted against the binding vote on Remuneration Policy. |
| 5 | Tesco Plc | Approve Remuneration Policy | For | Against | With respect to the LTIP award that was performance tested during the period under review, the Remuneration Committee has adjusted the comparator group attached to the relative TSR performance condition (50 percent of the award), which could be considered a retrospective change. This decision has allowed for vesting of approximately 67 percent of the award under this element, where performance against the original comparator group was below the threshold target. It is unusual for a TSR comparator group to be amended in this manner after the fact, as the reference group is typically changed only to reflect M&A activity over the performance period. That this adjustment has been made to the benefit of executives (as it provides a vesting outcome where awards would otherwise lapse), is considered a matter of poor practice. We were also aware that the newly appointed Chief Executive would have a salary 8 percent higher than the outgoing Chief Executive despite not having been in a Chief Executive role before. In addition we were aware that a Chief Executive who left the company five years ago had triggered an unfunded pension arrangement and that this had crystallised a payment of £10.7m. We were not completely comfortable with the approach taken to these remuneration matters. |
| 6 | CRH Plc | Approve Remuneration Report | For | Against | We had concerns that there was no commitment to bring the pension level of the CFO in line with the wider workforce by 2022. |
| 7 | Ferguson Plc | Approve Remuneration Report | For | Against | Significant bonuses have been paid, and it is not clear how the headcount reduction during the health pandemic has been taken into account, if at all, in connection with the scheme outturns. In addition, we had voted against remuneration changes that incorporated significant increases to variable pay last year. So it seemed logical to vote against this resolution this year. Despite receiving almost 30 percent dissent on remuneration at AGM last year the company made no changes to address the dissent. |
| 8 | Imperial Brands Plc | Approve Remuneration Report | For | Against | Concerns about linkage between pay and performance. The company has stated in its annual report that it does not envisage aligning the pensions of incumbent or new directors with those of the staff. |
| 9 | Just Eat Takeaway.com NV | Authorise Board to Exclude Pre-emptive Rights from Share Issuances. Authorise Board to Exclude Pre-emptive Rights from Share Issuances for Mergers, Acquisitions and/or Strategic Alliances | For | Against | The company was seeking approval to issue up to 25 percent of share capital and to disapply pre-emption rights. Under resolution 9a the company seeks approval to issue up to 10 percent without pre-emption rights, which we can support. However this resolution seeks approval to exclude pre-emption rights for a further 10 percent which exceeds our guideline limits. |
| 10 | Ocado Group Plc | Approve Remuneration Report | For | Against | The Company continues to operate a highly levered variable pay structure. Although Ocado has performed well, pay is excessive relative to peer companies. Multiple high-dissent (+20 percent) votes have been recorded on remuneration items at previous general meetings - both in terms of the legacy GIP, which produced FY2019's large payout, and the current VCP and the Committee has not significantly altered or moderated its approach in response to these votes. Large fixed pay increases have been awarded across the Executive Board; and- Discretion used to exclude the impact of the fire at the Andover Customer Fulfilment Centre on LTIP results. |
| Ocado Group Plc | Re-elect Lord Rose as Director | For | Against | We have concerns regarding the diversity of the board and therefore considered a vote against the Chair of the Nomination Committee to be appropriate. | |
| Ocado Group Plc | Re-election of other director | For | Against | We had concerns about the length of tenure | |
| Ocado Group Plc | Adopt New Articles of Association | For | Against | This was not considered to be in shareholders' best interests. The new Articles appear to provide the possibility for virtual-only shareholder meetings. While there are benefits from allowing participation at shareholder meetings via electronic means, virtual-only meetings may hinder meaningful exchanges between management and shareholders, and enable management to avoid uncomfortable questions. |
| Position | Company | Matter voted on | Vote direction recommended by Company | Vote direction taken | Reason |
|---|---|---|---|---|---|
| 1 | Novo Nordisk | Appointment of auditor | For | Against | Concerns about length of auditor tenure being too long |
| 2 | Kion Group | Election of Director | For | Against | Board is not sufficiently independent, serves on too many boards and is on nominating/governance committee |
| 3 | Total S.A. | Shareholder Proposal regarding GHG Reduction Targets | Against | For | We voted in favour of the proposal brought by shareholders for increased environmental reporting/responsibility. |
| 4 | Sanofi | Remuneration of former CEO | For | Against | We voted against the proposal as waiving of certain conditions of Long Term Incentive grants rapid pension rights accrual |
| 5 | Swiss RE Ltd | Appointment of auditor | For | Against | Concerns about length of auditor tenure being too long. |
| 6 | Apple Inc | Shareholder proposal to link Executive Pay to sustainability | For | Against | We voted in favour of the shareholder proposal to link executive compensation to social criteria |
| 7 | Kering | Election of Director | For | Against | Already a member of audit committee |
| Kering | Re-election of Director | For | Against | Director had less than 75% attendance rate | |
| Kering | Remuneration of Deputy CEO | For | Against | Poor compensation structure/performance conditions | |
| Kering | Remuneration Policy (Chair and CEO, Deputy CEO) | For | Against | We voted against equity awards to controlling shareholder | |
| Kering | Appointment of auditor | For | Against | Concerns about length of auditor tenure being too long | |
| 8 | Nike | Advisory Vote on Executive Compensation | For | Against | We were concerned about pay practices |
| Nike | Appointment of auditor | For | Against | Concerns about length of auditor tenure being too long | |
| 9 | Grifols | Appointment of auditor | For | Against | Concerns about length of auditor tenure being too long |
| 10 | Astrazeneca | Re-election of Director | For | Against | Director had less than 75% attendance rate |
| Astrazeneca | Election of Director | For | Against | Potential over commitment with other roles |