Shareholders of a company have the right to vote on certain aspects of the company's business, such as the election of the company's directors and the appointment of its auditors. A proxy is the document that companies send to shareholders to get their voting instructions.
Investment portfolios holding shares of companies are generally entitled to exercise the voting rights attached to those shares. Voting may occur for fixed income securities and some private market investments, but it is much less common.
RBC Global Asset Management Inc. exercises the voting rights attached to securities held by RBC Funds, PH&N Funds, RBC Private Pools, RBC Alternative Funds, RBC ETFs (“Funds”)1, and segregated client accounts where we have been granted voting discretion.2
As an asset manager, RBC Global Asset Management (RBC GAM) acts in the best interests of the accounts that it manages, including segregated client accounts and investment funds (collectively, “portfolios”).
We believe that issuers with good governance practices generally are able to focus on long-term sustainable growth, and are more likely to effectively manage conflicts and material environmental and social risk factors. These issuers are also more likely to access fixed income markets when needed, and pose less risk for equity investors due to proper alignment of shareholder and management interests. As such, we believe that exercising our voting rights is an effective way of considering issues that are material to our investments and can help protect and enhance the long-term value of the portfolios we manage.
We have established the RBC GAM Proxy Voting Guidelines (the “Guidelines”) to govern the exercise of our voting rights. The Guidelines set out the principles of corporate governance that RBC GAM will follow to determine whether and how to generally vote on matters for which a portfolio receives proxy materials. We review and update our Guidelines on an ongoing basis as our view of corporate governance best practices evolves and with the view to enhance the long-term value of our portfolios.
Our Guidelines are published for the information of clients, to provide issuers with our views on governance practices, and to provide issuers with context on our voting decisions. The Guidelines are applied for issuers in Canada, the United States, the United Kingdom, Ireland, Australia, and New Zealand. In all other markets, RBC GAM utilizes the local benchmark voting policy of Institutional Shareholder Services Inc. (ISS).
For more information, please refer to the Guidelines.
RBC GAM has a process to manage the review and approval of vote instructions. Our Responsible Investment (RI) team manages the internal review of proxy voting to help ensure that the custom recommendations made by ISS correctly reflect the intentions of the Guidelines. This includes the review of upcoming company meetings, corresponding meeting research and custom vote recommendations by the RI team’s analysts. Our investment teams receive regular reports of upcoming meetings for companies held in the portfolios they manage; these reports may include flags and rationales for any recommended votes against the recommendations of management based on either the Guidelines or ISS’ local benchmark voting policy.
RBC GAM has established a Proxy Voting Committee (“Committee”) which includes the RBC GAM Global Chief Investment Officer. The mandate of the Committee is to receive information and provide advice on matters relating to the Guidelines and the exercise of a portfolio’s proxy voting rights.
In the event of a perceived or actual conflict of interest involving the exercise of proxy voting rights, we follow procedures to help ensure that a proxy is exercised in accordance with our Guidelines, uninfluenced by considerations other than the best interests of our portfolios.
RBC Global Asset Management Inc. (“RBC GAM Inc.”) is a subsidiary of the Royal Bank of Canada (“Royal Bank”). Some of the Funds hold Royal Bank securities, resulting in a potential conflict of interest between the interests of the Funds and the interests of RBC GAM Inc. or its employees in connection with the voting of Royal Bank securities held by the Funds. In order to balance the interests of the Funds in exercising proxies with the desire to avoid the perception of a conflict of interest, RBC GAM Inc. has instituted procedures to help ensure that a Fund’s proxy is voted:
- In accordance with the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund.
- Free from any influence by the Royal Bank or another issuer and without taking into account any consideration relevant to the Royal Bank, another issuer, or any of their associates or affiliates.
The procedures for voting Royal Bank securities include escalation of the issue to the Independent Review Committee (“IRC”) for its review and recommendation prior to the vote, although the responsibility for deciding how to vote the Funds’ proxies and for exercising the vote remains with RBC GAM Inc. The IRC must consider the best interests of the unitholders of the Funds without regard for the interests of the Royal Bank, RBC GAM Inc., any individual portfolio manager of a Fund or any party related to any of them.