Chapter 6 - Engagement & Stewardship Flashcards
Which principle in the Principles of Responsible Investment (PRI) is the ‘engagement principle’?
(a) Principle 1.
(b) Principle 2.
(c) Principle 3.
(d) Principle 4.
(b) Principle 2.
What are the origins of the term ‘stewardship’?
(a) A butler, or steward, delivering food to the lord’s table.
(b) The steward responsible for mixing appropriate ingredients for a feast.
(c) The steward left in charge of an absentee landlord’s estate.
(d) A steward steering a ship.
(c) The steward left in charge of an absentee landlord’s estate.
What post-financial crisis report led to the creation of the first stewardship code?
(a) The Walker Report.
(b) The Oban Report.
(c) The Kay Report.
(d) The Arthur Report.
(a) The Walker Report.
What is the most significant difference between monitoring dialogues and engagement?
(a) Monitoring will influence trading decisions, engagement voting decisions.
(b) Monitoring is only done by portfolio managers, engagement only by stewardship staff.
(c) Monitoring occurs with investor relations staff, engagement with board directors.
(d) Monitoring is one-way information seeking, engagement two-way dialogue.
(d) Monitoring is one-way information seeking, engagement two-way dialogue.
Which of the following is NOT among the seven areas typically covered by the top-level principles of a stewardship code?
(a) Engagement and escalation.
(b) Voting.
(c) Reporting and transparency.
(d) Stock lending (or securities lending) policies.
(d) Stock lending (or securities lending) policies.
Which principle, more typical in regulatory codes, is frequently neglected in codes developed by investor groups?
(a) Conflicts of interest.
(b) Reporting and transparency.
(c) Stock lending (or securities lending) policies.
(d) Voting.
(a) Conflicts of interest.
Which of the following is NOT one of the prioritisation decisions that an investor must take in relation to stewardship?
(a) Which company to focus engagement attention on.
(b) Which annual general meeting (AGM) resolutions to vote on.
(c) Which sectors face the greatest ESG risks.
(d) Which are the key engagement issues for the individual company in question.
(b) Which annual general meeting (AGM) resolutions to vote on.
Which of the following is a new area of focus in the UK Stewardship Code 2020?
(a) Voting.
(b) Outcomes.
(c) Collaboration.
(d) Conflicts.
(b) Outcomes.
Which of the following is NOT among the main barriers to effective engagement?
(a) Limited resources.
(b) Difficulty of reaching consensus.
(c) Unwillingness to act without specific client instruction.
(d) Conflicts of interest.
(c) Unwillingness to act without specific client instruction.
Which of the following is NOT among the identified key mechanisms for the escalation of engagement?
(a) Holding additional meetings.
(b) Operating collectively with other shareholders.
(c) Withdrawing a shareholder resolution.
(d) Proposing new board members.
(c) Withdrawing a shareholder resolution.
When might escalation NOT be the right step in an engagement that has made no progress?
(a) When collective engagement is prevented by regulatory standards.
(b) When no progress has been made and the objective does not warrant excess activity.
(c) When divestment is the likely step should no change be made.
(d) Pending a forthcoming shareholder resolution.
(b) When no progress has been made and the objective does not warrant excess activity.
Which of the following is NOT a typical form of collective engagement?
(a) Informal collaboration between investors.
(b) Specialist stewardship service providers.
(c) Investor associations aggregating member views.
(d) Internet campaigns aggregating consumer perspectives.
(d) Internet campaigns aggregating consumer perspectives.
What is the major constraint on collective engagement approaches?
(a) Acting in concrete rules.
(b) Client best interests.
(c) Maintaining discretion over institutional shareholding.
(d) Investors are never in contact with each other.
(a) Acting in concrete rules.
Which of these is NOT a way for investors to make their voting activity more effective and influential?
(a) Hold an active dialogue with the company ahead of the decision.
(b) Attend the AGM, perhaps to make a spoken intervention.
(c) Writing afterwards to highlight the reasons for the voting decision.
(d) Only vote on resolutions where they have a clear opinion.
(d) Only vote on resolutions where they have a clear opinion.
An active investor concerned about the financial viability of the business is most likely to reflect that concern in their voting on:
(a) Board Director re-appointment.
(b) Auditor pay.
(c) Dividends issue.
(d) Audit Committee member re-appointment.
(c) Dividends issue.
