Engagement is based on the concept of shareholders raising concerns directly with company management and boards in a constructive manner. The Commission believes that sustained and focused dialogue with companies can be an effective way for long-term shareholders to bring about positive change. Hermes Equity Ownership Services (EOS) engages with companies on behalf of the Fund. Engagement activities include:
- Meeting with a company’s executive and non-executive directors;
- Participating in initiatives with other investors; and
- Submitting shareholder resolutions at general meetings.
Some engagements involve one or two meetings over a period of months while others are more complex and entail multiple meetings with different board members over several years. The Fund publishes a detailed summary of Hermes’ ongoing engagements on its website every quarter.
In 2012, Hermes voted on the NPRF’s behalf on 40,635 resolutions at 3,926 meetings and opposed one or more resolutions at 2,022 of those meetings. Hermes voted with management by exception (where it is satisfied the company’s management will act subsequently to address concerns) at 63 meetings and abstained at 47 meetings. It supported management on all resolutions at the remaining 1,794 meetings.