Votes on executive pay at AGMs

Take a poll and help a disadvantaged child

28 Sep 2020

Take a poll and help a disadvantaged child

Polls and charity don’t often mix.

At UBS Asset Management, we’re exploring a different way of gifting to disadvantage youths and children.

We want you – our investors, partners and readers involved.

For every poll answered, we will be donating $5 to Beyond Social Services in Singapore. Beyond Social Services helps children and youths from less privileged backgrounds break away from the poverty cycle through educational and development programmes.

This donation joins UBS’s USD30 million COVID-19 Response Fund and also the firm’s efforts to match employee and client donations to the UBS Optimus Foundation.

Thank you.

We sponsored 400 "Back to School" packs

But more than a straight out cash donation, we backed up Beyond Social Services when they told us that they needed sponsors for a Back to School project.

So we sponsored 400 “Back to School” packs for low-income kids in Singapore’s Henderson neighbourhood with SGD 30 bookshop and SGD 20 shoe vouchers to help them start the new school year.

We have kept the polls open and you can see how your choice stacks up.

How can votes on executive pay impact share prices?

UBS-AM donates $5 for every poll taken

At company’s Annual General Meeting (AGM), shareholders may be asked to vote on executive pay.

Can a negative vote (on executive pay) be an indicative signal for share price performance?

Poll Form

If you have the majority of shareholders voting against [executive pay] it shows a misalignment in terms of incentives. It is probably already a sign of poor performance.

Chris Greenwald, Head of Sustainable Investment Research said in an interview with the Financial Times

Using data science to evaluate ESG factors

Our data science (QED) team recently carried out an analysis on the back of a Morgan Stanley report (Say-on-Pay 2020, Mark Savino et al) that suggested that a negative vote on C-suite compensation leads to a relative one-year underperformance of 15% on average. This signal has been stable over the last five years.

QED has tested this thesis independently on compensation-related vote data from FactSet.

The dataset includes 1,700 observations from 2005 and onwards, with 95% of observations in the US. We were not able to replicate Morgan Stanley’s stable signal and degree of underperformance even if the results for 2018 and 2019 are promising.

However, large losses are more frequently observed for companies with a failed say-on-pay vote. Our analysis suggests that losses beyond -25% are twice as likely after a failed vote compared to S&P 500 constituents in general.

In an interview with Financial Times, Bryan Cross, head of QED said that these signals can guide investment decisions of our portfolio managers.

One-year total return post failed vote on executive pay

One-year total return post failed vote on executive pay.
Non-financial data is important in ESG investing. Investors need a more innovative approach at looking at information sources for insights on how companies are managing their environmental, social and governance policies.

How else does UBS Asset Management look outside of traditional data sets to consider ESG factors?

Thank you again for being part of our community engagement efforts.

UBS Asset Management will be making a $5 contribution towards Beyond Social Services.

This donation joins UBS’s USD30 million COVID-19 Response Fund and also the firm’s efforts to match employee and client donations to the UBS Optimus Foundation.

Social engagement is important to us and is part our corporate culture. It also guides the way we invest. For close to 10 years now, we’ve talked to companies about their environment, social and governance (ESG) policies and consider ESG in how we evaluate companies.

UBS Optimus Foundation

The UBS Optimus Foundation is the only foundation linked to a global wealth manager staffed with philanthropy experts.

The foundation leverages our unique network that allows us to take a leading role in driving impactful philanthropy that delivers solutions to social and environmental issues.

Together with our diverse partners, we're improving health, education and child protection systems as well as tackling environmental degradation and climate change – as this is an important path to a sustainable future.

Beyond Social Services

Beyond Social Services is a charity dedicated to helping children and youths from less privileged backgrounds break away from the poverty cycle.

They provide guidance, care and resources that enable families and communities to keep their young people in school and out of trouble.

Their hope and wish is for their beneficiaries to blossom into responsible adults, move past their socio-economic drawbacks and beyond social services by 25.

So far, they’ve reached out to over 10,000 rental units in government rental flats.

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