01 Our sustainability approach 02 Sustainable investing 03 Active stewardship 04 Corporate sustainability 05 Appendix 03.7 Exercising our voting rights Principles 7 11 12 The EU Shareholder Rights Directive II, Our rate of opposition to pay-related opportunity available under the where investors are given a say on pay proposals in the US in 2022 continued long-term incentive, although this and a vote on remuneration reports, to be high at 78%, a slight reduction on was reserved for future headroom has been a positive driver for investor 2021. Considering say on pay proposals with a smaller increase proposed dialogue. In 2022, in some European (advisory vote on executive pay) alone, in-year. The Remuneration Committee markets such as Germany or Sweden, the rate of opposition was much higher also sought flexibility in exceptional regulation required companies to put at 88%. We remain concerned that many recruitment awards to ensure they could their remuneration report to a vote for US companies fail to operate long-term attract the right talent. After engaging the first time. In Germany, AllianzGI voted incentives that truly reflect management on the underlying rationale, we voted against 47% of all compensation-related out-performance rather than market for these changes given that the resolutions and abstained on another 8%. movement. In 2022, we re-focused our company had demonstrated historic In Sweden, we voted against 46% of these approach to concentrate our stewardship alignment with pay and performance resolutions and abstained on another 9%. activities on the worst cases of high pay and a moderated approach to for mediocre performance. compensation increases. In a number of cases, we had concerns over transparency, particularly related 1. We voted against the remuneration Board independence, overboarding and to clearly disclosing the link between policy of a European utility company. role of the chair performance and pay-out. Other issues As part of the 2022 remuneration policy, In 2022, we voted against 23% of all of concern were discretionary pay the board proposed an exceptional director-related proposals, consistent components not backed by performance bonus to the CEO in connection with with the previous year. We opposed 25% and high pension provisions. a corporate transaction which had of all director elections as we continue to not yet been completed and the have major concerns about the sound and The very limited, and frequently absent, benefit to shareholders not proven. balanced set-up of many boards. We also disclosure on ex-post targets for short- Reflecting shareholder opposition, voted against several companies where term and long-term incentive plans the board announced during the AGM we deemed the board of directors and/ constituted the main reasons for voting that it would withdraw the resolution or board committees to be insufficiently against. We expect engagement with and, accordingly, it was not voted on. independent, either because directors our portfolio companies to result in more had a long tenure or where they were transparency over time. 2. As part of ongoing engagement representatives of major shareholders. with an Irish building materials This remained a concern in the US and producer, we met to discuss their the UK where we routinely come across latest remuneration policy and report. directors with long tenure. They sought to increase the maximum Allianz Global Investors Sustainability and Stewardship Report 2022 90