Global Corporate Governance Guidelines accept, however, that an optimal directors at widely held companies to links with other directors (eg, board size depends on the company’s be unquestionably independent. interlocking boards); circumstances and a larger or a – L arge shareholding (≥5%) or smaller board may be appropriate. While we would like to see the affiliation with a special interest Therefore, we will be looking at the majority independence standard group (eg, trade unions, board composition and processes adhered to by all boards, we government, affiliated companies, before making voting decisions. understand that this may not always etc); be achievable in the cases of – S ignificant commercial involvement In companies with unitary board controlled companies, companies with with the company as a professional structures, AllianzGI advocates a good co-determination structures and adviser, major supplier or customer; balance between executive and non- smaller public companies. Our or executive directors. We generally see expectation in such cases is for a – E ntitlement to performance-related it as a healthy practice for companies minimum of one-third independent pay, stock options, pension, or to have more than one executive directors, which provides the receiving benefits in the form of director on the board. necessary balance between large donations to charitable objectivity, protection of minority causes of their choice. In companies with a dual board interests and flexibility to shape an structure, where management and effective board that both reflects the AllianzGI believes that healthy gender supervisory responsibilities are split, company’s governance and/or balance can positively influence having a former executive can also ownership structure and helps the group dynamics, leading to better benefit the board and investors by company to achieve its business decision-making. For this reason, we bringing in-depth knowledge of the objectives. strongly encourage all boards and company to the supervisory board; management teams to strive for at however, this needs to be carefully In markets where establishing effective least 30% representation of male and weighed against the benefits of majority independent boards continues female genders. AllianzGI normally adding external knowledge and to be challenging for many companies votes against the re-election of the perspectives, particularly where (eg, developing markets, South Korea, Nominations Committee Chairperson boards also comprise employee Japan) we would also expect a of large-cap companies in developed 1 representatives. minimum of one-third of independent markets where board gender directors. However, we expect diversity is below 30%. We also expect Investors find it both important and companies to develop a clear roadmap to see national and ethnic diversity helpful to understand how the board in establishing majority board that appropriately reflects the fulfils its responsibilities and exercises independence over time and seek to geographic footprint and employee/ its supervisory functions, particularly identify and attract independent customer base of the business, as in relation to overseeing the candidates that would add value to well as other diversity attributes at implementation of the business the board and to the business. board level that can improve its strategy by the management. The effectiveness. AllianzGI would not flow of information to the board, AllianzGI defines director support the re-election of the board governance and decision- independence as being free of Nominations Committee Chairperson making processes, directors’ conflicts of interest or relationships of large-cap companies in the UK, the interactions with senior management with the company that may affect his/ US and Canada where there is not at outside of formal board meetings, and her independence of judgement. The least one member with an ethnically deep understanding of expectations circumstances that, in our view, can diverse background on the board. and concerns of the company’s main affect directors’ independence We strongly encourage disclosure of stakeholders are of critical importance include, but are not limited to the specific diversity targets set by the to board effectiveness and, following: board and reporting on performance consequently, a strong area of interest – Current employment by the against these targets. for investors. company; – Previous executive position at the Board leadership AllianzGI places great importance on company (a “cooling off” period of having a critical mass of five years or longer prior to AllianzGI believes that the roles of unquestionably independent non- appointment will be considered a Chairperson and Chief Executive executive directors on the board to mitigating factor); Officer should be separate to ensure a ensure that the interests of – Close family ties with the company’s clear division of responsibility at the unaffiliated shareholders are directors, senior employees or top of the company. For this reason, protected and conflicts of interests are advisors; AllianzGI will normally support managed effectively at all times. In – Board tenure of more than 12 years; resolutions requiring an independent general, we expect the majority of – Cross-directorships or significant chair. However, we may support the 6