Period: January 01, 2015 - December 31, 2015

Period: January 01, 2015 - December 31, 2015 Table 1. Statistics

7992 Total 7992 Total

3 Other

873 Against

9 Abstain

930 Against management 30 Withhold

7062 With management 7077 For

804 Number of meetings 7992 Votes Cast

In 411 (51%) out of 804 meetings we have cast one or more votes against management recommendation.

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Period: January 01, 2015 - December 31, 2015

Board Diversity – Gender diversity on Corporate Boards of listed companies. - 03/29/2015

Gender quotas are increasingly considered as part of the broader debate on good corporate governance standards. The idea is that corporate boards of public companies should strive to have an increased number of female representation on their boards. We see this trend is currently happening in several European countries, but to a much lesser extent in Asian countries or in the USA. Norway was the first country in the world to adopt legally-binding gender quotas when in 2003 it required companies to raise the proportion of women representation to 40 per cent. Since then, many others have followed. For example, Spain, France and Iceland have a quota of 40% of women board directors for2015. For Germany and Belgium the quota for 2015 is set to 30%, Italy has a quota of one-third and the Netherlands has a non-binding 30% target for 2015. The United Kingdom has not set a quota, but major British companies have accomplished 23% of women in their boards since the voluntary initiative known as the ‘30% club’ was launched in 2010. Noncompliance with these new regulations can bring different kind of sanctions to companies listed in these markets. For instance in France fees will not be paid to directors of non-compliant companies. At the EU level, in 2011 the EU Commission launched an action plan to increase female representation in corporate boards of European listed companies. More recently, the European Commission proposed legislation with an aim to transform company boards and boost women's presence to 40% by 2020. The opinions about the influence of gender quotas are diverse. Some studies have found that companies with female representation on corporate boards have better returns on sales and invested capital than companies which do not have it. These studies argue that enhanced performance can be related to the way women oversee situations, use their creativity, sensitivity, have different perspectives, career incentives etc. Others contend that gender quotas will reduce the efficacy of nominations to appoint the most qualified and talented candidates to the boards. It is also pointed out that gender quotas so far have not led to a significant increase in female executives on corporate boards. Diversity policy is a topical subject that is becoming more important in the Corporate Governance best practice principles. Many corporate governance organizations such as the ICGN and the EU Commission are acknowledging this. Robeco believes diverse boards can benefit corporate governance practices and corporate performance. As such, Robeco also supports gender diversity on corporate boards.

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General highlights


Robeco’s View on Voting by Show of hands - 05/15/2015

In March of this year, Robeco co-signed the vote by show of hands initiative for Australia by one of our peer investors under the initiative. A selection of companies listed in ASX100 were requested to amend their articles of association in order to remove a provision allowing them to vote by show of hands and instead require voting by poll on all resolutions. An important hurdle of voting by show of hands is that only the votes of the attendees of the physical AGM will be valid, which makes it very difficult for foreign investors to cast their votes and have a say as a significant shareholder. We believe voting by show of hands disenfranchises shareholders’ rights. According to the Australian Corporation Act of 2001, Australian companies are allowed to choose for voting by show of hands instead of poll voting on all proposals in shareholder meetings. When shareholders vote by show of hands the number of shares an investor holds is not a defining factor of the weight of the vote for any proposal. Instead of counting one vote per share, the show of hands method counts one vote per person regardless of how many shares that person has. Shareholder interests are best protected by voting by poll, which ensures that all votes are counted even in the case where a shareholder is not able to attend the AGM in person. Furthermore, this form of voting contributes to good corporate governance practices because it provides a vote in proportion to shareholders´ economic stake in a company with a “one share, one vote” approach. For these reasons, Robeco is in favor of voting by poll and believes that voting by show of hands should be avoided by every company.

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Special Shareholder Meetings - 9/1/2015 A listed company is obliged to hold an annual general shareholder meeting every year. These meetings are an important moment of the year for the company because it is when a member of the board, typically the CEO, presents the company’s annual accounts. Shareholders with voting rights also have the opportunity to elect board members approving company auditor and executive remuneration plans. Qualifying investors also have the opportunity to submit shareholder approval of their own proposals on Environmental, Social and Governance issues. However, there are also other types of shareholder meetings. Companies may also convoke shareholders to special shareholder meetings anytime during the year. The reason to raise a special meeting varies from a change in the name of the company or a merger/acquisition to adding or removing directors from the board or the liquidation of the company prior to the end of its statutory term. The date on which an annual shareholders meeting takes place is announced on time, often after the corporation’s fiscal year, to shareholders. Unlike annual meetings, special meetings do not take place on a pre-announced date and time and can take place any time throughout the year. Special shareholder meetings occur often between August and the end of October. An example is the special shareholders meeting of the telecommunications company Altice S.A which took place on the 6th of August 2015. During this meeting shareholder approval for a cross-border merger with New Athena B.V. was asked. Robeco voted against the merger because of serious concerns about the terms of corporate structure of the post-merger entity. To be able to call a special meeting, specific requirements exist. A special meeting is usually called by directors of the board, a corporation officer or one or more shareholders jointly who own a significant number of the outstanding shares of the company. When shareholders call a special meeting, they should take into account local legislation regarding the minimum percentages of share ownership to be able to call a special meeting.

The M&A boom of 2015- 09/30/2015 During a Special Shareholder Meeting shareholder approval is often required on wide variety of topics. This year the most prominent topic in this type of shareholder meetings has been mergers and acquisitions. Valuations of global M&A transactions have been the highest since 2007. This increase in activity has been attributed to some extent to low-cost financing and the pursuit of growth plans. Some of the transactions witnessed involved big players, resulting in some cases in the transformation of the industries in which companies have combined. Particularly in the pharmaceutical industry big companies reinvented themselves with transactions that targeted certain products to build scale in specific therapeutic areas. Given the high costs involved in developing breakthrough medicines, M&A is a cheap way for pharma companies to acquire leading-edge drugs and treatments. Besides driving agendas of corporate growth, merger transactions have also facilitated some companies migrating to more favorable regulatory environments. For example, the Luxembourg-based telecom company Altice SA caught the attention of investors when it relocated to the Netherlands after it was acquired by a Dutch subsidiary. The move was motivated by an attempt of Altice’s founder to maintain control even as he pursues acquisitions across the world that could potentially dilute his controlling ownership. The Netherlands is one of the few European countries that allow companies to adopt dual-class share structures that assign different voting rights to different classes of shares. In the case of Altice, the structure grants the founder 92% of voting power with only 58.5% of ownership in the company. When voting on proposals of merges and acquisitions, Robeco aims to take a holistic approach that takes into account both investment and corporate governance considerations. This means that the analysis studies the transactions not only in terms of investment opportunity but also the repercussions that they have on corporate governance. In particular, mergers and acquisitions should result in post-merger entities that observe best practices in corporate governance.


Vote confirmation pilot. - 12/31/2015

Robeco votes on behalf of clients via proxy. In practice, this means that proposed resolutions are voted from an electronic platform rather than in person at the meeting. For investors with globally diversified holdings, this is a practical way to cast their votes without travelling around the world. However, this also means that other intermediate parties need to process their voting instructions before they can be counted at a company's shareholder meeting. Given the complexities and lack of auditability of most proxy voting chains, it is often uncertain whether an investor’s vote arrives correctly at the Annual General Meeting. The PRI vote confirmation project group consists of a small number of institutional investors that has been running an initiative to improve the proxy voting infrastructure and create a confirmation process for proxy voting over the last several years. Robeco is part of this group. During the proxy voting season of 2015 a vote confirmation pilot was conducted to see if it is practically possible to execute a vote confirmation process in collaboration with all relevant parties in the proxy voting chain. The pilot is a manual exercise that feeds voting instructions from the issuing company back to the institutional investors via the same route as the voting instructions were sent in. The most important finding from the project is that vote confirmation is possible, even within the current complex composition of proxy voting chains. The participants received confirmation for their instructions within the scope of the pilot. The voting instructions received were correct for voted agenda items. Only a small deviation was found in the voted number of shares for one participant. Eight institutional investors participated using several hundreds accounts for this exercise. The pilot showed a number of procedural hurdles to provide confirmation. Reconciliation of voting instructions and account identification took fairly long for several of the intermediaries. Also the setup of authorization to release vote confirmations proved difficult, as this this is non-standard procedure. The pilot proved to be an insightful learning experience and showed which practical hurdles need to be overcome to develop a standardized automated procedure. For vote confirmation to become a standard process, it should be automated and standardized through various markets. This requires actions on several fronts. It will be a challenge aligning the interest and action of all participants in the proxy voting chain. Participants should also get a better understanding of the costs of automation. Requirements for a vote confirmation format need to be defined and agreed upon by all participants. Additionally, the reconciliation process of votes for various investment holdings for intermediaries need to be more efficient. The PRI vote confirmation project group is making plans to progress with these issues. A planned EU directive related to the topic might create further momentum for this initiative.

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Market highlights

Equal voting rights in France - 06/01/2015

One of the hot topics of proxy season 2015 is maintaining the “one-share, one-vote” system in some of France’s largest companies. Investors, and in some cases companies themselves, have been trying to repeal the implementation of the so-called Florange law, a legislation that automatically grants double voting rights from 2016 onwards to investors that have held shares in a listed French company for more than two years unless two-thirds of shareholders vote to overturn it. This legislation reverses the current situation where companies had to expressly choose to introduce double voting rights. Supporters of this new legislation assert that granting extra voting power to those owning stocks for more than two years rewards long-term shareholders. The assumption is that an investor with a two-year horizon, as opposed to one who trades every few milliseconds, is going to evaluate companies differently. It is for this reason that this kind of stock is called “loyalty shares”. Robeco acknowledges that long-term shareholding should be encouraged. However it also believes that the strategy of granting double-voting rights to long-term investors is not adequate. We believe that a deviation from the “one-share, one-vote” system, such as the double voting rights under the Florange law, gives certain shareholders power that is disproportionate to their economic interests and brings unfavorable treatment to minority shareholders. The French market is characterized by concentrated ownership by the state and founding families in listed companies. A consequence of the Florange law will be strengthening the voting power of block holders, leaving minority shareholders unable to influence the company through proxy voting. For these reasons, Robeco joined the shareholder engagement campaign led by the Paris-based active investors fund PhiTrust. French companies listed on the CAC 40 index that had not yet adopted a double voting rights structure were engaged to advocate for opting out of the implementation of the Florange law provisions. As part of the equal voting rights campaign, 13 companies in the CAC 40 index that did not have double voting rights before the Florange law was passed were engaged. As a result, 10 of these companies proposed resolutions for opting out of the law’s provisions. The campaign was relatively successful, as seven companies effectively repealed the implementation of double-voting rights, including the cosmetics giant L’Oreal, the property firm Unibail Rodamco, and the construction firm Vinci with over 99 per cent of approval. However, six companies did not gather enough shareholder support for the proposal on equal voting rights, among them being Véolia and the state-controlled company Renault. It is likely that similar regulatory developments to those in France will take place in other European countries. The Florange law comes amid a wider European debate revolving around the Shareholder Rights Directive, which would potentially include provisions allowing member states to deviate from the one-share one-vote structure. Some EU countries are already pursuing their own legislation on loyalty shares. In June 2014 the Italian government adopted the so-called “Development Decree” which includes a provision allowing listed Italian companies to issue shares with multiple-voting rights granting two votes per share.

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Italian Government withdraws proposal to extend period during which double voting rights can be approved by simple majority - 02/10/2015

In early February over 100 investors, including Robeco, wrote a letter to the Italian Prime Minister seeking to prevent an extension of the period during which double voting rights can be approved by simple majority. Following this letter, the Italian government decided to withdraw the proposal. The previous Italian law that demanded a two-third majority vote was reestablished. This move is seen as crucial in protecting minority investors in Italy. In June 2014 the Italian government adopted the so-called “Development Decree” which includes a provision allowing listed Italian companies to issue shares with multiple-voting rights granting two votes per share. Because these shares are granted only to investors who have held shares for more than 24 consecutive months they are also called loyalty shares. This divergence from the “one-share, one-vote” standard mainly disadvantages international investors, who are usually minority shareholders in Italian companies. In contrast, this provision particularly benefits the shareholdings of the Italian government in state- and family-owned companies, which amount to approximately 90 per cent of Italian listed companies. Doubling voting rights per share would give controlling shareholders power that is disproportionate to their economic interests. The withdrawal of the government’s proposal is an important move towards protecting minority shareholders’ voting rights in a market that is dominated by controlling shareholders. Companies with large block-holders, such as state-owned companies, will not be able to easily pass the double voting rights.

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Shareholder proposals on disclosure of lobbying expenditures of US companies - 06/14/2015

For the fourth consecutive year, shareholder proposals regarding political spending are among the most common resolutions during proxy season 2015. The proposals were filed at U.S companies to request improving disclosure of expenditure in political and lobbying activities. Shareholders are increasingly interested in disclosure of political spending due to ability and willingness of companies to spend large sums in political causes in the U.S., where disclosure requirements are in some cases relatively lenient. Companies may pursue political activities through contributions to many different types of organizations, and the disclosure requirements on corporate contributions vary per organization. For example, trade associations spend significant amounts of money in lobbying and donations to exercise political influence, but they are not required to provide a breakdown of the recipients of these expenditures. Also, when companies donate to certain advocacy groups they are pursuing “grassroots lobbying” or “indirect lobbying”, which also avoids federal regulation and disclosure of donors is not required. These cases allow companies to enjoy anonymity. It is often impossible to track corporate expenditures made to political causes through trade associations or indirect lobbying. The risks of insufficient disclosure are two-sided. On the one hand, investors are not properly informed about the political causes that companies are supporting. And on the other hand, companies themselves could lose oversight of how their donations are being used. In cases where a company’s political spending becomes associated with trade associations that support controversial causes, corporate brands can get hurt. Robeco supports proper oversight policies and disclosure regarding corporate political spending. When deciding how to vote on these proposals we analyze each company by looking into three broad aspects: (i) the policies on political spending already in place, (ii) the level of disclosure of recipients of political contributions, and (iii) disclosure of the company’s decision-making criteria, i.e. public policy priorities. Two of the companies where we supported a shareholder resolution for increased transparency on political spending are Google and Chevron, both of which are among the companies that spends the most money on lobbying. In our analyses we found that both companies disclose criteria for supporting political causes and provide itemized lists of its contributions to state-level organizations and Political Action Committees (PAC’s), which are private organizations typically established by corporations or trade associations to make contributions specifically to influence an election. However, in the case of Google it was unclear what oversight measures are in place on the spending process, and both companies failed to provide a clear overview on sums contributed to trade associations and expenditures in grassroots lobbying. The proposals at both meetings were well received among investors, although they did not reach the minimum votes needed to be approved. But even though proposals are not approved, voicing shareholder concern can bring positive change in companies. In 2014 the same proposal had similar support as this year’s meeting. Some attribute this result to Google's exit from the American Legislative Exchange Council (ALEC), which is an influential rightwing lobbying network that drafts model legislation on a broad variety of issues and has become under the fire in the past for promoting controversial legislative initiatives. Robeco expects that resolutions on disclosure of lobbying activities will continue to be prominently represented in future proxy seasons. As such, we will continue exercising our shareholder right to promote transparency in corporate political spending.

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Voting highlights

Agricultural Bank of China - 12/10/2015 - China

Sino Land Company Limited, an investment holding company, invests in, develops, manages, and trades in properties in Hong Kong. Its property portfolio includes residential properties, offices, industrial buildings, shopping malls, car parks, and hotels. Robeco has voted against the election of a director due to a potential risk of conflict of interests between this candidate and the company. He is the proprietor of a consultancy firm that received approximately HK$ 1,666,664 from Sino Land Company Limited for consulting services provided during fiscal year 2015. Because of his link with this consultancy firm his individual interests could potentially outweigh shareholders’ interests. Therefore we are of the opinion that it is not in shareholders’ best interest to vote in favor of the election of this candidate board member. It is also relevant that the company does not have a one-third independent board which is not in line with corporate governance best practice guidelines. The proposal received approval of 83.29 per cent of the votes casted. We have also voted against the proposal to issue shares without preemptive rights and to issue repurchased shares. The company required shareholder approval to issue shares representing a maximum of 20% of the company’s existing issued share. We believe that a maximum limit of 10% protects shareholders’ interests and we consider a maximum issuance of 20% is excessive. The company has failed to disclose the issue price discount which makes it difficult for shareholders to evaluate whether shareholders interest have been taken into account in case of issuance of repurchased shares. The proposals received approval of respectively 82.25 and 99.99 per cent of the votes casted.

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Altice S.A. - 08/06/2015 - Luxembourg

Altice SA operates as a cable and telecommunications company through its subsidiaries. Altice SA convened shareholders to its extraordinary general meeting with the purpose of seeking approval to the acquisition of Luxembourg-based telecom by a Dutch subsidiary. This transaction effectively allows the company to move its country of incorporation to the Netherlands. Dutch company law requires comply or explain with the Dutch corporate governance code. Therefore companies have a large degree of discretion regarding the implementation of its corporate governance. As a new Dutch corporate entity, Altice makes use of this opportunity. One example being the implementation of a dual-class share structures. Dual-class structures consist of a share division where companies may issue two classes of shares that grant different rights. Under the new capital structure of the merger agreement, Altice’s founder and Chairman would be able to increase its voting power in a manner that is disproportionate to its ownership and secure its control over the company. Prior to the meeting, Robeco engaged the company and raised several concerns regarding the proposed merger agreement. In addition, Robeco attended the extraordinary meeting in Luxembourg to voice our concerns with the board members. As a manner of summary, Robeco’s main concerns are the following: Robeco believes that dual share structures granting unequal voting rights can lead to a heightened risk of the controlling shareholder taking advantage of his position to extract private benefits from the company at the cost of minority investors. Altice has been growing rapidly since its initial public offering in 2014 thanks to the acquisition of many cable companies and mobile operators worldwide. However, these acquisitions also dilute voting power. Thanks to the new structure the Chairman, who is also a controlling shareholder with 58.5% ownership, can secure 92% of the company’s voting power while the company enjoys greater flexibility for financing and continue pursuing acquisitions. Apart from the introduction of the dual share class structure, the post-merger entity will not apply best practices to its corporate governance structure. For example, instead of appointing a majority of board members as provided by the code, Altice’s board of eight members will only have two independent directors. Also of great concern is the agreement between the Chairman and founder of the company and the board of directors to vote in favor of all the Chairman’s proposals for a period of 30 years. Although the controlling stake of the Chairman secured the approval of the merger agreement, Robeco voted against it due to the serious concerns about the terms of corporate structure of the post-merger entity.

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Bank Of America Corp. - 09/22/2015 - United States

Bank of America is a financial holding company. It offers a range of banking, investing, asset management and other financial and risk management products and services. At the special shareholder meeting of Bank of America, Robeco voted against a proposal to ratify an amendment to a bylaw that granted the CEO the additional role of chairman. In October 2014, the board of directors decided to combine the roles without prior consultation of shareholders. The shareholder vote on the bylaw amendment of the special meeting of 2015 follows investor discontent and pressure to give them a say in the matter. The bank’s decision to re-combine these roles was particularly contentious given the fact that it reverses shareholders’ vote of five years earlier to separate the positions. In 2009, the roles had been separated as a “crisis-era measure” as shareholders voted to take the chairman title away from the then CEO, as a vote of no-confidence. The board’s rationale for re-combining the roles is that the vote of 2009 to separate the roles took place in a different era, when the bank was reeling from the financial crisis. The board claims that the combined role is more appropriate for how the company is being managed, and it refers to changes made to management and the board of directors. The annual report states that the current management and composition of the board have provided leadership to enhance the bank’s performance. Robeco believes that an independent chairman is better fit for maintaining objective oversight on management to ensure that it is acting in a manner that creates value. Critically, the board is intended to ensure that the interests of shareholders and managers are closely aligned. The duty of the chairman is to lead independently the board in fulfilling such objective and ensuring it is effective. We believe that the decision of the board of Bank of American represents a step backwards in its corporate governance practices. We are also not convinced that the board has provided a good justification for the recombination of the CEO/Chairman roles. In our opinion, trusting the leadership of the current board and management’s composition is not enough to make fundamental structural changes that compromise the objectivity of the chairman’s oversight responsibilities. The separation of the CEO/chairman roles ensures that leadership is structured in a way that appropriate checks and balances are in place, regardless of the individual who is fulfilling those functions. There should be a clear division of responsibilities for the management of the company and leading the supervisory function of the board. When both of these roles are combined in an individual, decision making power may be concentrated and undermine directors’ capacity to challenge management. For this reason, Robeco is in favor of maintaining these functions separate. The proposal to amend the bylaws and allow the combination of the CEO/chairman roles was approved by 63 per cent of the votes.

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Cisco Systems, Inc. - 11/19/2015 - United States

Cisco Systems, Inc. is an American multinational technology company which designs, manufactures, and sells Internet Protocol (IP) based networking products and services related to the communications and information technology industry worldwide. We have showed our disapproval on Cisco’s executive compensation plan by voting against it. This is based on several reasons. To begin with, we noticed the sizeable equity awards with a value of 1,319% of fixed salary. Usually companies set maximum awards that are significantly lower. Secondly, the equity awards may be granted even if the company’s performance relative to peers is below median. The threshold performance is in the 25th percentile, the target performance at the 50th percentile, and maximum performance at the 75th percentile. We do not consider this as sufficient to cover the alignment between pay and performance. Another point of concern we have is that the use of performance multipliers in the annual bonus leads to high payouts. The CEO’s annual bonus is 363.3% of fixed salary, while on average companies set the limit at 200%. Lastly one-time awards were granted to three executives which is not in line with corporate governance best practices. Next to the proposal on executive compensation, it is also worth mentioning that we have supported the Shareholder proposal regarding Proxy Access. Focus of this proposal is that large, long-term shareholders, who at least beneficially owned 3% or more of the company’s outstanding common stock for three years continuously, should be able to nominate a director. We believe that this fosters the alignment between management and shareholders of the company. The potential abuse, by shareholders acting only in their own interest, of proxy access is eliminated, because of the minimum ownership size and time requirements limits. We have confidence in a fair election process because a shareholder director nominee would still need to be supported by the majority of shareholders to be elected as director. The proposal on executive compensation as well as the Shareholder proposal regarding Proxy Access obtained a majority of shareholder approval.

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KB Financial Group Inc. - 03/27/2015 - South Korea

KB Financial Group (KBFG) is one of South Korea’s leading financial institutions with the largest customer base nationwide. Early 2015 the financial group has made a radical change in its nomination by of allowing all shareholders to recommend outside directors. During the company’s Annual General Meeting on the 27th of March these nominees were up for election. As a result, three out of seven directors have been appointed to represent shareholder’ interests. The company has a long history of struggles in its corporate governance structure. Robeco has been engaging with the company since 2013 on concerns about the nomination process and composition of its board, which raised suspicions of interlinkages between the company and the government of South Korea. Following the latest scandals and subsequent CEO resignation, Robeco resumed its engagement with KBFG with the objective of prompting the company to improve the nomination policy of board members and undertake a transparent nomination process. A letter addressed to the new Chairman and CEO of the board and several conference calls with company representatives highlighted the importance of recruiting board members with the appropriate set of skills and expertise and who are independent. KBFG has taken important first steps towards an enhanced corporate governance structure. As part of its board reformation plan, the company formed an independent nomination screening committee tasked with assessing candidates, some of which were recommended by shareholders. The company has also determined to evaluate the performance of outside directors every year. Robeco welcomes the new corporate governance approach that KBFG has committed itself to undertake. However, many challenges still lie ahead for the financial group and we will continue to follow future developments.

Link Real Estate Investment Trust - 07/22/2015 - Hong Kong

The Link Real Estate Investment Trust is a real estate investment trust and focuses on the acquisition of retail properties primarily in Hong Kong. According to Robeco’s corporate governance policy, an audit committee should consist exclusively of independent non-executive directors. This ensures objectivity and independence of the committee’s decisions. In our analysis, we found that the company’s CEO, CFO, head of Internal Audit and the Head of Risk Management have attended all audit committee meetings. We are of the opinion that this could lead to a diminishment of the objectivity of the audit committee’s decision making process. We are in favor of audit committee meetings without the presence of executive directors. One of the candidates who is up for election as member of the audit committee is an executive. Because we believe that the members of audit committees should consist exclusively of independent and non-executive directors, we have decided to vote against this candidate board member.

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Mediobanca - Banca Di Credito Finanziario Spa - 10/28/2015 - Italy

Mediobanca Banca di Credito Finanziario S.P.A., together with its subsidiaries, provides retail, corporate, and investment banking services in Italy and internationally. During this meeting, the company asked shareholder approval of changes to the severance package for executives, senior management and head of Business units. According to the guidelines of the Italian Central Bank, Italian companies are required to submit all new or renewed severance agreements for corporate officers to shareholders for approval at the annual general meeting. The rationale of the company to add these new provisions to the severance package is to retain the targeted group. Currently the company’s severance policy caps termination and non-compete payments at two years of total pay. Total pay is calculated as fixed salary and average variable remuneration paid, generally, over the three years prior to termination. The maximum severance payment set by the company is €5 million. However this is not including indemnity in lieu of notice, and other amounts in case of a leave of an employee. Furthermore the board may apply exceptions to the aforementioned provisions for executive directors, senior management and heads of business units. In our evaluation of this proposal we have taken into account the Italian corporate governance best practice standards and the recommendations of the Italian Securities and Exchange Commission (CONSOB). Our analysis shows that the proposal grants the board discretionary power to award payments which are exceeding the settled cap for the CEO and other key executives. The proposal is not in line with the best practice that severance payments in general should not exceed two years of base salary. Taken the above into account we have decided to vote against this agenda item because it is not in the best interest of shareholders. The proposal on changes of the severance package for executives, senior management and head of business units obtained a majority of shareholder approval.

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Medtronic Plc. - 12/11/2015 - United States

Medtronic plc. manufactures and sells device-based medical therapies worldwide. At the Annual Meeting of Medtronic plc., Robeco voted against the election of a board director who is chair of the compensation committee, and member of the audit, governance and nomination committee. The vote against was granted mainly due to two reasons. Firstly, in our opinion he has not fulfilled his role as chair of the compensation committee. The executive compensation practices of the company failed to align pay with performance. Besides voting against the proposal on executive compensation plan, we believe that the chair should be held accountable for the weaknesses in implementing the remuneration policy. Some of the weaknesses identified include short-term incentives that are larger than long-term incentives, and using similar metrics at both the annual bonus and the equity awards. The implementation of the compensation policy also led to a significant disconnect between pay and performance. Based on our analysis, the CEO was paid significantly more than the median CEO compensation of peers, but Medtronic performed worse than its peers. A second concern we have about this director are his affiliations with the company. Considered as independent by the company, following our analysis we concluded that the director is affiliated with Medtronic due to a couple of circumstances. His daughter is employed at the company and received compensation of approximately $158,200 during fiscal year 2015. In addition, the director is also serving at the board of Greater Twin Citis United Way, to which Medtronic contributed in excess of $1 million or 1% of the organization’s consolidated gross revenues in fiscal year 2013. We believe these relationships could have an effect in the director’s objectivity and be subject to conflicts of interests. We prefer board committees that are entirely composed of truly independent directors. At the date of writing of this piece, Medtronic had not yet disclosed voting results on the proposals of the Annual Meeting.

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Nike, Inc. - 09/17/2015 - United States

Nike designs, develops, markets, and sells athletic footwear, apparel and, equipment, worldwide. At Nike’s annual general meeting, a shareholder proposal requesting that the company reports in detail direct and indirect political contributions was voted. The proposal is a renewed push for the company to become more transparent regarding its political spending practices. Nike had similar proposals in the agendas of annual meetings in previous years, the latest of which reached 20% shareholder approval in 2013. Transparency of corporate political spending is increasingly becoming a point of attention for investors. It is a concern that political spending of companies may at times not be aligned with their sustainability strategy. A report produced in 2005 by Accountability, a UK research advisory institute, and the UN Global Compact identified a gap between the public corporate responsibility statements and sustainability commitments of many companies and their lobbying activities. In some cases, the sustainability agendas of companies were contradicted and undermined by the lobbying associations supported through political contributions. Moreover, since 2010 corporate political spending has become an increasingly prominent concern in the US after a Supreme Court ruling removed limits on the amounts that can be contributed to political campaigns. Robeco supports proper oversight policies and disclosure regarding corporate political spending. When deciding how to vote on these proposals we analyze each company by looking into three broad aspects: (i) the policies on political spending already in place, (ii) the level of disclosure of recipients of political contributions, and (iii) disclosure of the company’s decision-making criteria, i.e. public policy priorities. In addition, we pay attention to the disclosure policy on contributions to trade association’s advocacy groups pursuing “grassroots lobbying” or “indirect lobbying”. Disclosure of these contributions is either lenient or not required, allowing companies to enjoy anonymity. It is often impossible to track corporate expenditures made to political causes through trade associations or indirect lobbying. This poses the risks that investors are not properly informed about the political causes that companies are supporting, and companies themselves could lose oversight of how their donations are being used. Robeco supported this shareholder proposal because the current company practices are not aligned with best practice, and they are lagging benign superior levels of transparency of peers. There was concern on some elements of Nike’s disclosure policies. Firstly, the policy sets a threshold for reporting where only contributions of over US$100,000 are disclosed. Secondly, contributions to third-party groups such as trade associations are currently not disclosed. Corporate lobbying is often conducted through business and trade associations, thus Nike’s reporting practices are very likely excluding relevant part of its political spending. These limitations in the contributions reported prevent shareholders from obtaining a good understanding of the risks presented by the company’s political spending practices. And thirdly, it appears that the board does not maintain full oversight on the contributions made by the company. Contributions to candidates, political parties, ballot initiatives or contributions to an industry association that aggregate to less than $100,000 fall out of the scope of review by the board. For these reasons Robeco has supported the shareholder proposal in order to encourage the company to enhance its disclosure of political spending.

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Novartis AG - 02/27/2015 - Switzerland

Novartis is a Swiss pharmaceutical company involved in the research, development, manufacture, and marketing of a large range of healthcare products worldwide. In 2015 Novartis continues to attract investors’ attention in its annual general meeting. This year the company requests shareholder approval for the adoption of changes introduced by the ordinance against excessive remuneration, also known as the ‘Minder Initiative’, ratified by the Swiss federal government on 20 November 2013. The ordinance has the purpose of giving shareholders a binding say on the aggregate amounts that can be paid to executive directors of Swiss listed companies. It also eliminates certain forms of remuneration such as advance payments and golden parachutes. Although most of the new set of rules have been adopted by Swiss company boards, some parts including the binding vote on remuneration only came into force on 1 January 2015. As such, Novartis shareholders must approve for the first time with a binding vote the remuneration of the members of the board and the executive committee, as well the corresponding by-laws amendments to adapt to the new rules of the ordinance. Following the exit package for the exorbitant amount of USD$ 79 million that Novartis proposed in the AGM 2014 for its former chairman, Daniel Vasella, Robeco welcomes the adoption of binding shareholder votes on the cap amounts allocated to executive compensation. Therefore, we voted in favor for 1) the amendments to the by-laws related to the implementation of the Minder Initiative and 2) proposed total aggregate amount of senior executive compensation. However, we voted against the details / structure / targets policy of the proposed executive remuneration policy. Our main objection concerns the structure of the bonus, which relies on subjective performance goals that allowed unacceptable levels of board discretion. It was particularly worrisome that up to 90 per cent of a director’s bonus may still be awarded where the company fails to meet the more clearly defined financial targets and strategic performance metrics.

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Oracle Corp. - 11/18/2015 - United States

Oracle Corporation develops, manufactures, markets, sells, hosts, and supports database and middleware software, application software, cloud infrastructure, hardware systems, and related services worldwide. Robeco has withheld its votes this year for five candidates to the board of directors due to several reasons. First of all three of the five candidates served as members of the compensation committee during the past fiscal year. They failed to develop a compensation policy that aligns pay with performance. Many shareholders, including Robeco, had concerns about last year’s compensation program for the executive directors of the company. At last year’s annual meeting, the advisory resolution on executive compensation received 45.8% of the votes cast. This year the company did not implement relevant changes in the compensation policy to better align pay for performance. Secondly three of these candidates received compensation over $ 1 million during fiscal year 2015 for their additional services to the company as committee chairs. This is twice as much as independent directors in other companies. We believe that the pay is negatively impacting the independence of these directors from management. Furthermore external business relationships exist between the company and three of the five concerning candidate board members. This could cause potential conflicts of interests which is undesirable. An agenda-item on this year’s agenda which received our support is the shareholder proposal regarding Proxy Access. Focus of this proposal is that large, long-term shareholders who at least beneficially owned 3% or more of the company’s outstanding common stock for three years continuously, should be able to nominate a director. We believe that this fosters the alignment between management and shareholders of the Oracle Corporation. The potential abuse, by shareholders acting only in their own interest, is eliminated, because a minimum ownership size and time requirements limits are part of the proposal.

Pernod Ricard - 11/06/2015 - France

Pernod Ricard produces and sells wines and spirits worldwide. It is the owner of brands such as Absolut vodka, Beefeater gin, and Ballantine’s whisky. At the annual shareholder meeting of Pernod Ricard, Robeco voted against the election of two board directors. Following our assessment, we found that only four out of 14 board members are independent. The directors in question are a Ricard family member (she is the Great-granddaughter of the company’s founder Paul Ricard), and an independent director chairing the nominations committee. The election of the second nominee mentioned was not supported because, as chair of the nominations committee, she is accountable for the appropriate composition of the board. According to French legislation and best practice in corporate governance, boards of directors should be composed of a majority of independent members. The company was originally family-owned. Pernod Ricard was created in 1975 through the link-up of two French anise-based spirits companies: Pernod, which was founded in 1805, and Ricard, founded by Paul Ricard in 1932. The Ricard family does not have a controlling stake, with 14% of ownership. However, the Ricard family has been at the front of management, and five (36%) board directors are affiliated to the Ricard family. The remaining non-independent members include the CEO, two representatives of Groupe Bruxelles Lambert – a significant shareholder of the company, and two employee representatives. We do not believe that the level of representation of the founding family represents its stake in the company. In our opinion, more independent directors should be appointed to the board to ensure the protection of interests of all shareholders. The resolution on the election of these two directors obtained a majority of shareholder approval.

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Royal Dutch Shell Plc. - 05/19/2015 - United Kingdom

Royal Dutch Shell Plc. is an Anglo-Dutch multinational oil and gas company operating in both exploration and production and refining and marketing. The Shareholder Proposal Regarding Climate Change Reporting proposed this year on the Annual General Meeting of Royal Dutch Shell Plc. has received a lot of attention in the investment community. As most shareholder proposals do not get support from management, it is remarkable that both companies were supportive of the resolution and acknowledged the importance of taking actions to minimize the climate effects to which the operations of both companies contribute. The proposal requests both companies to enhance their 2016 reporting on climate change effects. Reporting should cover topics such as operational emissions management, asset portfolio resilience to the International Energy Agency’s scenarios and low carbon energy research and development (R&D). Furthermore, investment strategies, relevant strategic key performance indicators and executive incentives and public policy positions relating to climate change are also topics covered by the proposal. The company already reports on climate, for example via disclosures to the Carbon Disclosure Project (CDP). However, Royal Dutch Shell Plc. received a “B” carbon performance band (on an A –E scale) grade in their CDP disclosures of 2014. Within this assessment, considerable weight is given to operational emissions management, also covered in the shareholder proposal, such as strategic and governance issues. The question is: how will the company receive an “A” grade in the future? Robeco believes that the request of this proposal will add additional value to both the sustainability practices of Royal Dutch Shell Plc. The company has the ability to reduce climate change effects successfully by implementing the proposal requests. Therefore, we have voted ‘For’ the shareholder proposal on this year’s Annual General Meeting of Royal Dutch Shell Plc.

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SABMiller plc. - 07/23/2015 - United Kingdom

SABMiller Plc. is a multinational brewing and beverage company and operates in the beer and soft drinks business. At this year’s annual general meeting of SABMiller Plc. we came across two agenda items which are not in line with best practice in corporate governance which we apply in our voting policy. The first agenda item of concern is the remuneration report (Advisory vote) of the company. At last year's annual general meeting approximately 6.6% of shareholders voted against the Company's remuneration policy and a further 12.8% abstained. The remuneration policy has many shortcomings. First, the share option plan uses an absolute single performance metric, rather than a relative one, as the only metric of the long-term incentive plan. Using absolute metrics only may largely reflect economic factors beyond the control of executives rather than the own individual performance of the board members. This does not lead to optimal incentives. Therefore we are more in favor of long term incentive plans which include relative measures. Furthermore, it is best practice to measure performance with multiple metrics because this leads to a more adequate evaluation of the company’s performance. The company has failed to fully disclose the specific targets used under the bonus scheme. Also, SABMiller has not provided an assurance that it will limit equity-based awards to 10% of the Company's issued share capital over a 10-year rolling period according to best practice in the UK. For these reasons, we have not supported the proposal on remuneration report. The second agenda item we voted against is the re-election of a candidate board member. The candidate is a nominee of Altria Group, which beneficially owns approximately 27% of the company’s shareholder capital. This could lead to conflicts of interests. We consider him not independent enough to serve on the board of SABMiller Plc. Moreover this nominee is also a member of the audit committee, which according to our corporate governance best practices should consist exclusively of independent directors to serve in the best interests of shareholders.

Samsung Electronics - 03/13/2015 - South Korea

Samsung Electronics Co. Ltd. engages in consumer electronics, information technology and mobile communications, and device solutions businesses worldwide. To be able to assess the company’s financials Robeco believes the financial statements of the company should be audited independently. Furthermore the results should be available on time for all shareholders before the Annual General Meeting takes place. This is key for shareholders to be able to make adequate investment decisions and preventing them from bearing risks based on false information. Furthermore it will give shareholders time to determine whether the financial statements have been prepared according to the Korean accounting standards and corporate governance principles. It is not common for Korean companies not to disclose audited financial statements on time for European shareholders before their voting deadline (two weeks before the annual meeting takes place) to instruct Proxy Votes via their electronic platform. The official legal deadline for Korean companies is to disclose the auditor’s report seven days prior to the annual meeting. Samsung Electronics was not able to provide shareholders the audited financial statements before Robeco’s deadline to instruct Proxy Votes for the AGM. Therefore Robeco was not able to assess the appropriateness of the financial statements and could not approve the related agenda-item. As a consequence we have instructed an ‘Against’ vote on the approval of financial statements of Samsung Electronics on this year’s AGM.

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Sky Plc. - 11/04/2015 - United Kingdom

Sky plc. operates as a home entertainment and communications company in the United Kingdom and Ireland. Public companies in the UK must submit their remuneration report for non-binding approval on an annual basis. In the AGM of 2015, Robeco voted against the remuneration report of Sky plc. Robeco has also voted against remuneration reports in the past years since 2012. When voting on remuneration plans, Robeco pays close attention to their structure. It is essential that executives are being incentivized with the adequate award structures and metrics that are most appropriate for the company, based on their sector and strategy. In the case of Sky plc., Robeco found several shortcomings in its remuneration plan. Firstly, the metrics used in the equity awards are not challenging enough. There are three metrics used, and a full payout is granted if minimum performance of one of the targets is achieved together with the achievement of maximum performance of the other two targets. Robeco believes that a full payout should be granted only when a company has outperformed in all of its targets. A second shortcoming identified in the compensation report is that the structure of the equity awards is not aligned with best practice and is likely to determine payout levels that are disconnected to performance. The company determines the levels of awards by setting a number of shares (e.g. 600,000 for the CEO), rather than by setting limits as a percentage of base salary – which is in line with UK market practice. According to the company, this method to determine the size of awards is justified because “awarding a fixed number of shares each year with no correlation to salary means that year-on-year growth in total compensation can only be achieved through share price appreciation”. We believe that such an approach does not necessarily reward management for good performance, as fluctuations in share price may be due to market forces over which executives have little control. A third concern we have with the remuneration plan is the matching-shares plan. Under this plan, executives are incentivized to take up to half of their annual bonus in company shares, rather than being paid up in cash. They can be rewarded with up to 1.5 shares for every 1 share invested. Vesting is based on identical EPS performance targets used under the equity awards, which brings the potential of two sets of payouts for the same performance. When companies use share matching schemes, we believe that they should use additional performance criteria that is not already being used by other elements of the remuneration plan. The resolution was approved by 92.8% of votes casted. It is important to mention that Sky plc. has a block holder, Twenty-First Century Fox, Inc., which owns 39.48% of issued capital.

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Tate & Lyle plc. - 07/29/2015 - United Kingdom

Tate & Lyle Plc. provides ingredients and solutions to the food, beverage, and other industries worldwide. It specializes in manufacturing sugar-based food ingredients, as well as other ingredients, industrial chemicals and animal foods. At the annual general meeting of 2015, Tate & Lyle Plc. failed to secure shareholder approval on their remuneration report. In general, the company paid more remuneration to its CEO than the median CEO remuneration for a group of similarly sized UK companies. This amount is higher than the median of remuneration paid by a group of UK based companies in the Consumer Staples sector and higher than the median of a group of European Food, Beverage and Tobacco companies. Furthermore the company performed worse than the peers. The majority of FTSE 350 issuers include extended holding periods in their long term incentive plan award. This is positive, as it strengthens directors’ interests with those of shareholders Tate & Lyle Plc. has not chosen to implement this in their remuneration plan. Another point of attention is the performance share plan. The performance targets that are part of the company’s long term incentive plan are exclusively based on absolute measures. We are of the opinion that this does not reflect the individual performances of executives, because of significant correlations between absolute measures and economic factors. Furthermore Tate & Lyle does not provide a clear description of short term incentive targets under the company’s bonus scheme. Given this poor disclosure it is not possible to fairly evaluate the incentive plan. We also noted that the recruitment awards for the new CFO are not subject to performance but instead have the function to compensate him for the forfeited awards from his prior employer. The company did not disclose the specific performance conditions attached to the £1.2 million buy-out award for the new CFO, and the committee's methodology in setting award levels. Taking all the items described above into consideration, we have voted against the company’s remuneration report.

Tatts Group Ltd - 10/30/2015 - Australia

Tatts Group Limited is an Australia-based company that provides gambling services in Australia and the United Kingdom. At the 2015 Annual Shareholder Meeting of Tatts Group, Robeco voted against the executive remuneration report. There were a number of concerns with the structure of the remuneration policy. First, the remuneration emphasizes incentives on short-term term performance, as the amounts paid under the fixed salary and annual bonus are larger than the long term equity-based awards. This concern becomes more worrisome as in fiscal year 2016 the CEO’s fixed salary has been increased by 29 per cent in comparison to fiscal year 2015. It is also noteworthy that the fixed salary of executives is slightly higher than that of the company’s peers. For instance, the salary is 7 per cent higher than peers per market capitalization, and almost 50 per cent higher than other consumer discretionary companies in the same sector group. We believe that executive remuneration should be aligned with performance, and as such we are skeptical about Tatts Group’s focus on fixed remuneration. A second concern is the board’s discretion to determine pay level and composition of the annual bonus. Although the company has established a number of quantitative financial metrics, the board may still determine bonus payouts based on metrics outside of the formula and/or market related benchmarks. This includes discretion to determine an incentive where performance against performance metrics is strong. The proposal on executive remuneration report received approval of 88.64 per cent of the votes casted.

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Visa Inc. - 01/28/2015 - United States

Visa INC. is an American multinational financial services corporation. It facilitates electronic funds transfers throughout the world, most commonly through Visa-branded credit cards and debit cards. Robeco believes the independence of nominees to the Board of Directors is a very crucial point in light of corporate governance best practices. In this years’ annual general meeting, we voted against the election of one nominee to the board of directors of Visa INC. The nominee was considered to be affiliated to the company, raising concerns about possible conflict of interests. The nominee is the mother-in-law of an employee of VISA U.S.A, who receives an annual compensation of 300.000,- USD. The fact that the nominee has a family relationship with a company employee who receives such a substantial annual compensation raises concerns about potential conflicts of interests. Furthermore, the nominee is also elected to serve as member of the risk and audit committees of the company, which should consist of only independent members according to corporate governance best practices. Consequently we have voted ‘Against’ the election of this nominee to the board of directors of Visa INC.

Robeco Institutional Asset Management B.V. (‘Robeco’) distributes voting reports as a service to its clients and other interested parties. Robeco also uses these reports to demonstrate its compliance with the principles and best practices of the Tabaksblat Code which are relevant to Robeco. Although Robeco compiles these reports with utmost care on the basis of several internal and external sources which are deemed to be reliable, Robeco cannot guarantee the completeness, correctness or timeliness of this information. Nor can Robeco guarantee that the use of this information will lead to the right analyses, results and/or that this information is suitable for specific purposes. Robeco can therefore never be held responsible for issues such as, but not limited to, possible omissions, inaccuracies and/or changes made at a later stage. Without written prior consent from Robeco you are not allowed to use this report for any purpose other than the specific one for which it was compiled by Robeco.

Disclaimer

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Period: January 01, 2015 - December 31, 2015

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Transcript of Period: January 01, 2015 - December 31, 2015