Investment Stewardship - 2019 in focus: Asia-Pacific region
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Investment Stewardship 2019 in focus: Asia-Pacific region
In focus: Asia-Pacific region
Vanguard funds own shares in nearly 13,000 public companies around the world. In the 12 months ended June 30, 2019, the
Vanguard funds voted 83,070 proposals at 10,234 meetings for Asia-based companies across all major sectors. In addition,
we emphasized our engagement efforts in this region and engaged with 41 Asian companies in 2019.
While we recognize regional market variations, our approach remains consistent globally.
2019 highlights
41 $54 billion 15%
Companies engaged Total engaged equity Of Asia-Pacific equity
assets under management AUM engaged
Regional trend: Asia’s governance evolution
We have seen corporate governance practices in Asia-Pacific markets strengthen over recent years. One driver has been the
adoption of stewardship codes. Such codes have grown more numerous globally as market participants encourage
companies to improve their governance practices. Asian markets have followed this trend, and so far eight countries have
adopted codes.
Our Investment Stewardship program has experienced firsthand the effects of this progress. Efforts to engage are embraced
more frequently, and we have seen a rise in dialogue that includes directors. Directors and management understand the
importance of a well-composed board and are increasingly focused on building an independent board structure. Despite a
few troubling high-profile examples of entrenched boards that are deferential to management teams, we are optimistic about
the broader trend of greater board independence.
Although many of our discussions with Asia-based companies focus on foundational aspects of governance best practices,
we’re seeing an increasing appetite for covering more mature topics such as climate risk. Companies are improving their
disclosure and board oversight of this and other risks. In some cases, companies have adopted reporting consistent with
standards set forth by the Task Force on Climate-related Financial Disclosures.
Along with the rise of good governance in Asia, we have seen a rise in activism. Even as some companies’ governance
profiles have matured, others have not met the market’s expectations. This has given activists an opportunity to voice their
opinions and launch campaigns. We view Asian activism as we do in other markets: While activists often raise legitimate
questions and concerns, we will evaluate each side’s position on its merits and support the path best aligned with long-term
value creation for our investors.
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Proxy voting history
Summary of proxy votes cast by Vanguard funds
for companies in the Asia-Pacific region*
(July 1, 2018–June 30, 2019)
9% of equity AUM | 10,234 meetings
2018 2019
Alignment
with our Number of Number of
principles Proposal type proposals % for proposals % for
Board Management proposals
composition
Elect directors 21,832 96% 21,855 95%
Other board-related 5,270 89% 5,315 90%
Shareholder proposals
Board-related 2,944 87% 2,760 89%
Oversight of Management proposals
strategy and Approve auditors 3,424 99% 3,019 99%
risk
Shareholder proposals
Environmental/social 49 0% 43 0%
Executive Management proposals
Remuneration Executive remuneration 6 67% 4 75%
Other remuneration-related 4,670 93% 4,988 94%
Shareholder proposals
Remuneration-related 63 89% 130 90%
Governance Management proposals
structures
Governance-related 7,699 85% 8,377 90%
Shareholder proposals
Governance-related 75 79% 108 78%
Other Management proposals
proposals
Capitalization 17,566 98% 18,263 98%
Mergers and acquisitions 6,764 95% 6,131 98%
Adjourn/other business 11,271 97% 11,041 96%
Shareholder proposals
Other 976 90% 1,036 93%
Total 82,609 95% 83,070 95%
*Note: The funds’ voting in the Asia-Pacific region encompasses these markets: Bangladesh, China, Hong Kong, India, Indonesia, Japan, Malaysia, Marshall
Islands, Mauritius, Papua New Guinea, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, and Thailand.Company engagements
The following table lists the 41 companies that Vanguard’s Investment Stewardship team engaged with in the
Asia-Pacific region during the 12 months ended June 30, 2019. A bullet (•) indicates a primary topic of the engagement.
However, these are open dialogues and can cover a wide range of issues over multiple discussions. Secondary topics
often come up.
For context, board composition discussions can cover topics such as board independence, tenure, and diversity. When
we discuss oversight of strategy and risk, we want to know whether the board understands how the company will
remain relevant over the long term in the context of all relevant risks. Our discussions on executive remuneration look at
pay in comparison with relevant peers and its linkage to long-term performance benchmarks. Our meetings about
governance structures focus on companies’ provisions that support—or limit—shareholders’ ability to effect change over
time through their voice or their vote.
Oversight of
Board strategy Executive Governance
Market Company name composition and risk remuneration structures
China Alibaba Group Holding Ltd. •
China Petroleum & Chemical Corp. • •
PetroChina Co. Ltd. • • •
Sinopec Oilfield Service Corp. •
Yum China Holdings, Inc. • • •
Hong Kong CLP Holdings Ltd. • •
Hong Kong Exchanges & Clearing Ltd. • • •
HSBC Holdings Plc •
Link REIT • • • •
India Colgate-Palmolive India Ltd. • • •
Genpact Ltd. •
Japan Alpine Electronics, Inc. • •
Asahi Group Holdings Ltd. • • •
Daiwa House Industry Co. Ltd. • • •
FANUC Corp. • •
Fujikura Ltd. • •
Fujitec Co. Ltd. • •
Honda Motor Co. Ltd. • • •
JGC Corp. • •
Kansai Electric Power Co., Inc. • •
Kirin Holdings Co. Ltd. • •
Kyushu Railway Co. • •
Maeda Corp. • • •
Mitsubishi Corp. • •
Mitsui Fudosan Co. Ltd. • •
Mizuho Financial Group, Inc. • •
Nippon Yusen KK • •
Nissan Motor Co. Ltd. • •Oversight of
Board strategy Executive Governance
Market Company name composition and risk remuneration structures
Japan Shionogi & Co. Ltd. • •
Subaru Corp. •
Sumitomo Corp. • •
Sumitomo Metal Mining Co. Ltd. • • •
Sumitomo Realty & Development Co. • •
Ltd.
Takeda Pharmaceutical Co. Ltd. • • •
Tokio Marine Holdings, Inc. • •
Tokyo Electric Power Co. Holdings, Inc. • •
Yamaha Motor Co. Ltd. • •
Yamato Holdings Co. Ltd. • •
South Korea Kumho Petrochemical Co. Ltd. • •
Samsung Electronics Co. Ltd. • • • •
Taiwan Taiwan Semiconductor Manufacturing • •
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