Wellington International Management Company Pte Ltd
Response to the
Japan Stewardship Code
Principle 1
Institutional investors should have a clear policy on how they
fulfill their stewardship responsibilities, and publicly disclose it.
Wellington Management
manages assets for institutions located around
the world. Our expertise
is investment management, and we focus our full
resources on meeting the
needs of our clients.
We view our consideration, understanding,
and engagement on topics
related to the long-term
investment horizon as consistent with and supportive
of the stewardship responsibilities described in the
Japan Stewardship Code.
On 1 January 2015, we implemented changes to rationalize
the corporate structure of the Wellington Management group.
Wellington Management Company, llp (a Massachusetts
limited liability partnership) changed its name to Wellington
Management Group llp and transferred its advisory business
and SEC registration to a new Delaware subsidiary, Wellington
Management Company llp. Similarly, other affiliates of the
Wellington Management group changed their names and/or
form of organization to better suit the evolution of our business
worldwide. Our employees and partners have substantially the
same roles and responsibilities under our new structure as they
held prior to these changes.
For decades, Wellington Management has been actively engaging with companies we invest in on issues that can impact “corporate value”, such as corporate
governance or labor standards for example. We view our consideration,
understanding, and engagement on topics related to the long-term investment
horizon as consistent with and supportive of the stewardship responsibilities
described in the Japan Stewardship Code.
This document provides commentary on how we discharge our stewardship responsibilities and is available on the web site of our parent company,
Wellington Management Company LLP, and Wellington International
Management Company Pte Ltd. Our application of the Japan Stewardship Code
is a global effort and applies broadly across asset classes when applicable and
as appropriate. Questions about this statement or our overall approach can be
directed to our business relationship team.
Principle 2
Institutional investors should have a clear policy on how they
manage conflicts of interest in fulfilling their stewardship
responsibilities and publicly disclose it.
Wellington Management does not engage in retail brokerage, lending, securities
underwriting, or proprietary trading and is not affiliated with any firms that
engage in these businesses. In addition, the firm’s business model, ownership
structure, and culture seek to align the interests of clients with those of the firm.
Our broadly diversified client base and functional lines of responsibility help to
minimise the number of potential conflicts of interest in relation to stewardship.
Together, these structural elements may help the firm avoid some of the typical
conflicts of interest in the investment management business that may arise in
connection with stewardship responsibilities.
As a fiduciary, we seek to place the interests of our clients first and to avoid
conflicts of interest, including those that arise from voting or engagement
issues. Our policies and procedures for managing conflicts of interest in relation to corporate governance issues are contained in the Global Proxy Policy
and Procedures maintained by our parent company Wellington Management
Company LLP. While this rule is not publicly disclosed, Wellington
Management Company LLP sets up an internal rule to define criteria for identifying conflicts of interest in proxy voting. In addition, on an annual basis, our
Corporate Governance Committee sets standards for identifying material conflicts with respect to proxy voting and corporate engagement.
Response to Japan Stewardship Code
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Principle 3
Institutional investors should monitor investee companies
so that they can appropriately fulfill their stewardship
responsibilities with an orientation towards the sustainable
growth of the companies.
Our clients’ assets are managed by experienced professionals who focus on specific investment approaches, each with a well-articulated investment philosophy
and process. Monitoring companies is an integral element of our investment
processes. The majority of our company research is the result of direct contact
with company management, both in our offices and on site, including contacts
with company suppliers, customers and competitors.
We do not have a chief investment officer. Instead, our firm is organised as
a community of teams, each functioning as an entrepreneurial unit within
an established organisation that provides it with global research, investment
and business resources and stability. The importance of governance matters,
including but not limited to the effectiveness of portfolio company boards and
committee structures, to the relevant investment style will differ. Therefore,
we do not impose a single mechanism for how our investment professionals approach these issues. As experienced professionals, they are in the best
position to determine what is most important given the investment style and
particulars of the company and industry in question.
Principle 4
Institutional investors should seek to arrive at an understanding
in common with investee companies and work to solve problems
through constructive engagement with investee companies.
Engaging with company managements plays a critical role in helping to identify, understand, and appropriately consider investment risks and opportunities.
We have not developed prescriptive guidelines or a separate policy on how we
foster dialogues with companies. This is because decisions to engage are made
on a case-by-case basis by our portfolio management and corporate governance
teams, and depend on the materiality of the issue, the responsiveness exhibited
by the company to past communications and our assessment of whether such
engagement is in the best interests of our clients. Our engagement activities
can include meeting with company boards, speaking to non-executive directors,
carrying out proxy voting or participating in stakeholder dialogues.
Principle 5
Institutional investors should have a clear policy on voting and
disclosure of voting activity. The policy on voting should not be
comprised only of a mechanical checklist; it should be designed
to contribute to the sustainable growth of investee companies.
We take the responsibility of proxy voting seriously. We have policies and procedures designed to ensure that we collect and analyse relevant information
for each meeting, apply our proxy voting guidelines accurately, and execute
the votes in a timely manner. Ultimately, each vote must reflect the specific
situations at stake, and these can vary broadly. Therefore, portfolio managers
and analysts have discretion to vote proxies in the best interest of each client
portfolio they manage.
Response to Japan Stewardship Code
3
While Wellington Management does not rely on any external parties for recommendations or vote determinations, we do subscribe to the research products
supplied by various proxy advisors and research providers, including ISS, Glass
Lewis and GMI. We use an electronic voting platform provided by one of our
proxy advisors to facilitate electronic receipt and execution of ballots.
We disclose the aggregated results of proxy voting by our contracted clients
in accordance with the rules of Japan Investment Advisers Association and
provide the relevant data to support public disclosure by those clients that are
required to do so by law. Our actual votes on behalf of a given client or pool
are a matter of record for that client or pool, and are disclosed to the respective
party in the reports they are entitled to receive.
Wellington Management may be unable to vote proxies when the underlying
securities have been lent out pursuant to a client’s securities lending program.
In general, Wellington Management does not know when securities have been
lent out and are therefore unavailable to be voted. Efforts to recall loaned
securities are not always effective, but, in rare circumstances, Wellington
Management may recommend that a client attempt to have its custodian recall
the security to permit voting of related proxies.
Principle 6
Institutional investors in principle should report periodically on
how they fulfill their stewardship responsibilities, including their
voting responsibilities, to their clients and beneficiaries.
We keep records of our proxy voting activity and upon request provide regular
reports to clients for whom we have the authority to vote as part of a systematic
portfolio reporting process. We also provide clients with a quarterly update
on recent developments in the corporate governance arena and representative
examples of our engagement activities.
Wellington Management has a Corporate Governance Committee, established
by action of the firm’s Executive Committee, which is responsible for the
review and approval of the firm’s written Global Proxy Policy and Procedures
and the Global Proxy Voting Guidelines, and for providing advice and guidance on specific proxy votes for individual issuers. The Corporate Governance
Committee meets regularly and comprises a global network of senior professionals from across several business functions within the firm. The firm’s Legal
and Compliance Group monitors regulatory requirements with respect to proxy
voting on a global basis and works with the Corporate Governance Committee
to develop policies that implement those requirements. Day-to-day administration of the proxy voting process at Wellington Management is the responsibility
of the Investor and Counterparty Services Group.
Principle 7
To contribute positively to the sustainable growth of investee
companies, institutional investors should have in-depth
knowledge of the investee companies and their business
environment and skills and resources needed to appropriately
engage with the companies and make proper judgments in
fulfilling their stewardship activities.
To help our portfolio managers and investment teams better assess risks and
opportunities in client portfolios, we have integrated the analysis of environmental, social, and corporate governance (ESG) factors into our investment
and risk-management processes firmwide. A centralized, in-house hub known
as Investor and Counterparty Services provides our investors with tailored
ESG resources and information to support ESG considerations, incorporating
research, company engagement, and in-depth portfolio reviews.
We maintain relationships with over 400 research providers, allowing our investors access to multiple data sets across thousands of securities. Our firm also
collaborates with a number of ESG-related investor networks such as the United
Nations–supported Principles of Responsible Investing (PRI), an international network of investors and investment managers — including Wellington Management
— working toward putting responsible investment practices in place globally.
Wellington Management Company LLP Boston | Chicago | Radnor, PA | San Francisco
Wellington Global Investment Management Ltd Hong Kong | Beijing Representative Office
Wellington International Management Company Pte Ltd Singapore | Sydney | Tokyo
Wellington Management International Ltd London | Frankfurt
Wellington Management switzerland gmbh Zurich
www.wellington.com
Wellington Management Company LLP (WMC) is an independently owned investment adviser registered with the US Securities and Exchange
Commission (SEC). WMC is also a commodity trading advisor (CTA) registered with the US Commodity Futures Trading Commission. In certain circumstances, WMC provides commodity trading advice to clients in reliance on exemptions from CTA registration. WMC along with its subsidiaries and
affiliates (collectively, Wellington Management), provides investment management and investment advisory services to institutions around the world.
This material is prepared for, and authorised for internal use by, designated institutional and professional investors and their consultants or for such
other use as may be authorised by Wellington Management. This material and/or its contents are current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Wellington Management. This material is not intended
to constitute investment advice or an offer to sell, or the solicitation of an offer to purchase shares or other securities. Investors should always obtain
and read an up-to-date investment services description or prospectus before deciding whether to appoint an investment manager or to invest in a fund.
Any views expressed herein are those of the author(s), are based on available information, and are subject to change without notice. Individual portfolio
management teams may hold different views and may make different investment decisions for different clients.
In the UK, this material is provided by Wellington Management International Limited (WMIL), a firm authorised and regulated by the Financial Conduct
Authority (FCA). This material is directed only at persons (Relevant Persons) who are classified as eligible counterparties or professional clients under
the rules of the FCA. This material must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment service to
which this material relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. In Germany, this material is provided
by Wellington Management International Limited, Niederlassung Deutschland, the German branch of WMIL, which is authorised and regulated by the FCA
and in respect of certain aspects of its activities by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). This material is directed only at persons
(Relevant Persons) who are classified as eligible counterparties or professional clients under the German Securities Trading Act. This material does
not constitute investment advice, a solicitation to invest in financial instruments or financial analysis within the meaning of Section 34b of the German
Securities Trading Act. It does not meet all legal requirements designed to guarantee the independence of financial analyses and is not subject to any
prohibition on dealing ahead of the publication of financial analyses. This material does not constitute a prospectus for the purposes of the German
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you by Wellington Global Investment Management Limited (WGIM), a corporation licensed by the Securities and Futures Commission to conduct Type
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represent that you are a non-retail investor and that you will not copy, distribute or otherwise make this material available to any person. In Australia,
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Australian financial services licence (AFSL) under the Corporations Act 2001 in respect of financial services, in reliance on class order 03/1100, a copy
of which may be obtained at the web site of the Australian Securities and Investments Commission, http://www.asic.gov.au. The class order exempts a
registered investment adviser regulated by the SEC, among others, from the need to hold an AFSL for financial services provided to Australian wholesale clients on certain conditions. Financial services provided by Wellington Management Company LLP are regulated by the SEC under the laws and
regulatory requirements of the United States, which are different from the laws applying in Australia. In Japan, Wellington International Management
Company Pte Ltd (WIM) has been registered as a Financial Instruments Firm with registered number: Director General of Kanto Local Finance Bureau
(Kin-Sho) Number 428. WIM is a member of the Japan Investment Advisers Association (JIAA) and the Investment Trusts Association, Japan (ITA). WMIL,
WGIM and WIM are also registered as investment advisers with the SEC; however, they will comply with the substantive provisions of the US Investment
Advisers Act only with respect to their US clients.
©2014 Wellington Management Company LLP. All rights reserved.
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