The Advisors' Blog

Late last week, State Street Global Advisors published the annual update to its “Global Proxy Voting & Engagement Policy” – which will apply to 2025 annual meetings. Dave blogged about the governance-related changes today on TheCorporateCounsel.net.

As Dave noted, and as Meredith shared over on TheCorporateCounsel.net a couple weeks ago, recent guidance from the Corp Fin Staff about beneficial ownership reporting recently caused certain other asset managers to evaluate their engagement practices – and at the same time, big investors and proxy advisors are defanging some of their voting policies. For SSGA, the cover page notes:

When engaging with and voting proxies with respect to the portfolio companies in which we invest our clients’ assets, we do so on behalf of and in the best interests of the client accounts we manage and do not seek to change or influence control of any such portfolio companies. The State Street Global Advisors Global Proxy Voting and Engagement Policy (the “Policy”) contains certain policies that State Street Global Advisors will only apply in jurisdictions where permitted by local law and regulations. State Street Global Advisors will not apply any policies contained herein in any jurisdictions where State Street Global Advisors believes that implementing or following such policies would be deemed to constitute seeking to change or influence control of a portfolio company.

This year’s policy also clarifies that, while SSGA uses ISS for vote execution and administrative services, it doesn’t follow the voting recommendations of ISS or any other proxy advisor. When it comes to executive compensation, SSGA’s policy was already pretty high-level, and SSGA didn’t change the description of expectations and factors it considers in its “say-on-pay” assessment, which is in line with how Vanguard handled this year’s (minimal)updates on this topic. SSGA’s “Board Accountability” policy continues to say:

We consider it the board’s responsibility to determine the appropriate level of executive compensation. Despite the differences among the possible types of plans and awards, there is a simple underlying philosophy that guides our analysis of executive compensation: we believe that there should be a direct relationship between executive compensation and company performance over the long term. Shareholders should have the opportunity to assess whether pay structures and levels are aligned with business performance. When assessing remuneration reports, we consider factors such as adequate disclosure of various remuneration elements, absolute and relative pay levels, peer selection and benchmarking, the mix of long-term and short-term incentives, alignment of pay structures with shareholder interests, as well as with corporate strategy and performance. For example, criteria we may consider include the following:

• Overall quantum relative to company performance

• Vesting periods and length of performance targets

• Mix of performance, time and options-based stock units

• Use of special grants and one-time awards

• Retesting and repricing features

• Disclosure and transparency.

The change this year is that the policy no longer expressly states what happens if the SSGA team believes that pay is misaligned. Previously, the policy specified the potential consequence of voting against say-on-pay and/or members of the compensation committee. It’s too early to know whether this means SSGA will take a lighter touch in its compensation reviews, compared to past practices. Here’s how it voted in 2023, for reference, according to the stewardship report published last year:

In 2023, for example, we voted against executive compensation at a company because the portion of long-term compensation linked to performance outcomes was too low.

In 2023, there were 22,164 proposals on compensation practices or policies across our global investment portfolios. This represented 11 percent of all proposals that we voted on in 2023. In 2023, we supported approximately 77 percent of pay-related proposals, compared to 78 percent in the previous year.

– Liz Dunshee