Making shareholder engagement count

What is the difference between William Tell and outgoing Sika chair Peter Hälg? William Tell represents the myth and reality of Swiss independence. Not too far from here, the famous apple shot took place, which encouraged the Swiss Confederation to revolt against the Habsburg takeover. It took a while, but this small Swiss association managed, against all odds, to create the basis for a free, peaceful and prosperous country. Peter Hälg also led a successful rebellion against a takeover, this time against the French and their allies. It was perhaps the longest takeover battle in Swiss history.

Speech by Christopher Rossbach, World Stars Global Equity portfolio manager.
at Sika’s 2024 annual meeting in Baar, Switzerland

We invest in companies that have high quality and that can compound over long periods. Engagement with these companies is of great importance to us and our stewardship activities are an integral part of how we manage assets for our investors.

As active managers, we act as stewards of our clients’ capital. We have a fiduciary duty to preserve and enhance the value of assets entrusted to us by our clients. Maintaining a constant dialogue with company management is a key part of maximising shareholder value over the long term. We engage actively with the companies we have invested in and use our voice to encourage change if we believe our companies should take more aggressive action to address important issues. We do our own analysis and make our own decisions instead of relying on the inputs of proxy advisors when we vote. This allows our voting to be active, engaged and consistent across our investments.

Many issues have the potential to impact the value of investments. including corporate strategy, capital allocation and structure, remuneration, M&A activity, governance and material environmental or social issues (ESG). In engaging with our investee companies, we look to support decisions that enhance the value of our clients’ investments, and at the same time, to ensure that they are alive to risk factors that may detract from that value.

Engagement is a continual process. Last year, for example, we engaged with our investee companies and collaborative engagement bodies on 102 occasions to discuss topics about their capital structure, strategy, operational performance and ESG matters. In 42% of the engagement outreaches, we had the opportunity to discuss these matters directly with C-suite executives and/or senior management. This year, we decided to support the Disney board as it fought a proxy fight against activist investor Nelson Peltz, who was seeking a board seat at the media giant. We felt strongly that the new chair Mark Parker and the CEO Bob Iger had taken important steps to put the company’s strategy back on track, and that Disney was best served by focusing on performance and Iger’s succession.

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