01 Our sustainability approach 02 Sustainable investing 03 Active stewardship 04 Corporate sustainability 05 Appendix 03.4 Engagement outcomes Principles 7 9 Embedding ESG KPIs in remuneration Following the updates to our proxy Shaping sustainable pathways towards change voting guidelines, a key element of our engagement on remuneration is around the integration of ESG metrics into First-time engagement on executive compensation. board independence with See section 03.7.2. This is a trend across multiple markets a Chinese multinational and our feedback to companies is that we want to see metrics which are transparent, We engaged with a Chinese and expressed our expectation that it quantifiable and tied to the long-term multinational technology company should incorporate additional non- strategy. We look to assess whether KPIs on board structure issues, with a executive directors to mitigate investor proposed by the remuneration committee key focus on board independence. concerns. This would also benefit clearly align with the wider business Its board of directors lacked an its overall ESG rating. We received model and material issues and how independent majority for several positive feedback from the company weightings and stretch targets drive value years. The company used to adopt which added two additional creation and strategic decision making. a conservative communication independent directors to the board at A European professional services company approach with investors on corporate its recent general meeting, resulting in sought to include climate metrics in their governance topics, but proactively had a majority independent board for the annual bonus scheme. We engaged the expanded its ESG team in the past first time in years. remuneration committee to understand months. We approached the company the rationale for including this metric and its preference for the short-term incentive. We understood that this tied into its sustainability strategy, which would be supported by SBTi verification, and that it impacted a larger number of employees. We therefore supported the proposal. Allianz Global Investors Sustainability and Stewardship Report 2022 80