2018

ENGAGED SHAREHOLDER REPORTVOTING RIGHTS AND DIALOGUE POLICY

LYXOR International Asset Management

2018 Financial Year

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Florent Deixonne, Head of Sustainable and Responsible InvestmentLYXOR Asset Management

ÉDITO

For several years now, LYXOR has placed Socially Responsible Investment at the heart of its investment strategy by creating concrete solutions that take into account environmental, social and governance factors in order to meet the challenges of the future.

As an asset manager, our fiduciary responsibility to our clients is the implementation of all means to enhance long-term value creation. The voting and engagement policy is one of the levers to achieve it.

As such, we express our convictions on corporate governance through the exercise of our voting rights and our expectations toward issuers in which we invest: i.e. that they take into consideration all extra-financial issues face, in full transparency.LYXOR has set up an internal ecosystem of experts to ensure this necessary qualitative analysis.

2018 was particularly rich for LYXOR in terms of shareholder engagement. We have taken a new step with the implementation of our engagement policy. Throughout the year, we have actively engaged with companies in a spirit of exchange and construction concerning, of course, governance, but also on climate issues.

Indeed, for its first engagement campaign, LYXOR wanted to focus on the climate transition and it is therefore naturally that we joined the international initiative Climate Action 100+.

This first “engaged shareholder" report presents a summary of the implementation of LYXOR's voting and engagement policy in 2018.

Have a pleasant reading !

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2018 KEY FIGURES*

Assets under management and

advisory**

€137,3 bn

Voted assets

€14 bn

Share of voted assets***

77%

UN-PRI rating « Strategy & Governance », 2018

A+

Number of voted general meetings

200

Number of analyzed proposals

2,613

Share of general meetings with one negative vote

77%

Number of companies met as part of the engagement

32

Average rate of opposition at general meetings

22%

€13.8 bn

200

22% 77%

78%

2,612

*Figures as of December 31st, 2018. Figures presented in the larger circles concern the entire LYXOR Group including LYXOR Asset Management and LYXOR International Asset Management. Details for LYXOR International Asset Management are presented in the smaller circles. ** Included €19.6bn of assets under advisory.** Based on equity-type underlying assets in investment vehicles in direct replication. The funds where the exercise of the voting rights are delegated to an external manager are not taken into account.

€75.7bn

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INTRODUCTION

LYXOR International Asset Management SAS (hereafter referred to as “LYXOR”) is a fully-owned

subsidiary of Societe Generale Group. This document outlines how LYXOR, on behalf of its

clients, exercises its role as an engaged and responsible shareholder.

Convinced of the environmental, social and governance challenges, LYXOR has defined – as an

extension of its approach as a responsible investor

and in line with its adherence, since many years,

to the United Nations Principles for Responsible

Investment (PRI) – a shareholder engagement

policy attached to the securities held by the CISs

(AIFs and UCITS) which it manages.

This policy is reflected in two complementary areas: a constructive dialogue policy between

LYXOR and companies owned, and a voting policy, thereby fulfilling the fiduciary obligations to

LYXOR's clients.

LYXOR’s voting and dialogue policy for the 2018 financial year is available on the website of the

asset management company, at the following address:

https://www.lyxor.com/en/socially-responsible-investment

In accordance with the regulation of the French Financial Market Authority (AMF) no. 319-22 and

321-133, LYXOR reports in this document the

conditions under which it exercised its voting

rights. This report covers the 2018 financial.

LYXOR’s 6 commitments as a signatory of the PRI

We will incorporate ESG issues into investment analysis and decision-making processes.

We will seek appropriate disclosure on ESG issues by the entities in which we invest.

We will promote acceptance and implementation of the Principles within the investment industry.

We will be active owners and incorporate ESG issues into our ownership policies and practices.

We will work together to enhance our effectiveness in implementing the Principles.

We will each report on our activities and progress towards implementing the Principles.

1 2 3 4 5 6

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DIALOGUE POLICY

Convinced that the performance of a company is not solely based on its financial performances, LYXOR

today expects companies in which it invests to take into account extra-financial issues as well as be

transparent about it.

Integrate these environmental, social, societal and

governance issues, is beneficial to the long-term

performance of companies and therefore in the long-term interest of investors.

In order to promote best practices in this area, LYXOR has defined a dialogue policy with issuers

that can be divided into two distinct and complementary actions:

1. GENERAL PRINCIPLES

As the representative of the shareholders UCIs that it manages, LYXOR undertakes to exercise the voting rights attached to the shares held by these UCIs in order to promote best practices in corporate governance. To do so,

LYXOR will use its influence before general meetings, to initiate a constructive dialogue with companies with a double objective:

Enrich the analytical work and vote in perfect

knowledge

Encourage companies to adopt best practices in terms

of corporate governance

LYXOR will define one theme related to environmental, social, societal or governance issues to engage with the concerned companies. The purpose is to influence companies to improve or adopt the best Corporate Social

Responsibility practices.

A proactive dialogue before general meetings

A thematic engagement

2. IMPLEMENTATION OF THE DIALOGUE POLICY1

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In 2018, the Sustainable and Responsible Investments team of LYXOR had the opportunity to carry out 36 engagement campaigns among 32 European companies. These campaigns could specifically concern the issuer’s

general meeting or being broader and address environmental, social or governance issues.

Thereby, 57% of the engagement campaigns were directly linked to topics addressed during general meetings

and 43% concerned ESG issues specific to each company. These discussions mainly – 46% – took the form of

physical meetings, 34% were carried out through conference calls and 20% during roadshows (event allowing

the issuer to discuss with several investors).

Distribution of the engagement campaigns types

Distribution of the engagement campaigns formats

Geographical distribution of companies met

As a French asset manager, LYXOR considers, its role

of engaged and responsible shareholder’ towards all

the more impacting on French issuers. Thereby, for this first year of engagement campaign, LYXOR

deliberately laid emphasis on dialogues with French issuers.

In addition, since we want to be consistent with our voting scope (see. Part II: Exercise of voting rights),

LYXOR also initiated dialogues with non-French

companies.

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Among the various addressed topics,

executives’ compensation was one of the

most frequent, especially in view of the implementation of binding vote on

executives’ ex-post compensations within the framework of the law Sapin 2.

The organisation and the composition of boards of directors or supervisory board,

were at the heart of discussions as well. LYXOR notably questioned:

• the qualifications of board’ members

and their adequacy with the company’s

activity and/or strategy;

• the level of board diversity;

• the attendance of board members at

board and/or committees meetings;

• the independency qualification of board’

members by the company;

• the presence of employee

representatives at the board…

The 2018 financial year was also the occasion to review the lead director’s function, the statutory auditors’ seniority and their fees’ allocation, or even the shareholder structure for some companies. The combined

functions of Chairman and Chief Executive Officer was addressed several times as well. Moreover, some dialogues allowed to better apprehend certain strategical operations of the type merger / acquisition.

In some cases, these dialogues before issuers’ general meeting, allowed to clarify some issues and thus, to avoid negative votes from LYXOR (see. Part II: Exercise of voting rights).

Finally, during the entire general meetings’ season, LYXOR, in line with its policy of engaged and responsible

shareholder, systematized a proactive communication with issuers when an opposition with at least one of the

proposals submitted to shareholders vote was pre-registered.

Dialogue before general meetings

Distribution of discussed topics

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Finally, LYXOR is a signatory of the Climate Action 100+ initiative. Launched in December 2017 during

the One Planet Summit, the Climate Action 100+ is a

collaborative initiative which now gathers more than

300 investors (representing more than 32 trillions of

dollars in assets under management) and defines a

monitoring list including more than 160 companies around the world, which are the most emitters of

greenhouse gases (GHG).

By joining this initiative, LYXOR commits to initiate

dialogue and to collaborate with companies on the

list and of which LYXOR is a shareholder, in order to

make sure they implement an appropriate

governance to the climate issue.

The first results of this engagement campaign will be available in our 2019 Engaged Shareholder report.

Thematic engagement

In 2018, the Socially Responsible Investments team of LYXOR also had the opportunity to discuss with 15

companies about broader issues than those addressed during general meetings.

As illustrated in the graph, governance issues remain a widely addressed topic since 60% of the covered

themes concerned questions relative to board

composition or organisation, and compensation policy

implemented by the company.

Nonetheless, these discussions also allowed to deepen

some questions that are as precise as, the

consideration of sustainable development stakes

throughout the value chain, the deployed strategy in

order to reach climate targets, the diversity policy rolled

out,…

Distribution of the discussed topics

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VOTING RIGHTS ACTIVITY

In the long term, good corporate governance must result in an improvement in the company's performance. In order to do so, shareholder engagement is essential. By exercising its voting rights, LYXOR can contribute to

improve the economic and financial performance of the companies in which it invests on behalf of its clients, with the aim of encouraging the adoption of best practices and mitigate the risk of business failure.

1. GENERAL PRINCIPLES

Protection of the long-term interests and rights of shareholders

Independence and diversity of board of directors

Balance of the financial structure of the company

Fair and transparent executives’ remuneration policy

Quality and integrity of financial information

Integration of corporate environmental and social responsibility

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3

4

5

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The 6 pillars of good corporate governance according to LYXOR

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2. IMPLEMENTATION OF THE VOTING POLICY

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2.1 Internal governance committee

An internal governance committee oversees the implementation of the LYXOR’s voting policy. This committee is

composed of the following members:

Edouard AuchéGeneral Secretary

Florent DeixonneHead of Sustainable & Responsible Investments

Raphaël DieterlinHead of ETF & Index Product Strategy

Guillaume LasserreChief Investment Officer

Marc NoëlHead of Legal Affairs

Philippe RémyChief Compliance Officer

Déborah Slama YomtobAnalyst Sustainable & Responsible Investments

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2.2 Voting process

The Socially Responsible Investments team of LYXOR carries out a detailed analysis of the corporate

governance of companies for which LYXOR will

exercise its voting rights.

The composition of the board of directors, the separation of the functions of Chairman and Chief

Executive Officer, the diversity policy, the compensation policy, the respect of shareholders’

rights are among other, topics analyzed by the team and discussed during engagement meetings.

Moreover, LYXOR uses the services of an external

provider. This proxy advisor establishes analysis and

provides voting recommendations.

LYXOR relies on these recommendations, but decides

on the basis of its own voting policy and retains the

final decision. After conducting a market survey of the different providers, LYXOR currently uses the services

of ISS (Institutional Shareholder Services).

Where electronic vote is possible, voting is cast through a Proxy Exchange Platform on which LYXOR

inputs its voting instructions.

In exceptional cases where electronic vote is not

possible (notably for some French companies), proxy voting forms are filled out according to LYXOR’s voting

policy and sent to the relevant issuers by post.

The formalization of voting decisions takes into

account global corporate governance standards and

local governance regulations and codes.

3. RESUME OF VOTES AT GENERAL MEETINGS

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3.1 Voting context and scope

In 2018, LYXOR exercised its voting rights on the following scope:

• French Funds (Fonds Communs de Placement – FCP), French and Luxembourgish SICAV2

• European issuers3

From this section, the data presented are specific to the management company LYXOR Interbational Asset

Management.

Under 2018, the voting scope included 24 funds and concerned 181 companies through 200 general meetings

(comparatively to 147 companies and 158 general meetings in 2017).

Voting rights were exercised by correspondence or through Proxy Exchange Platforms.

Geographical distribution of general meetings voted in 2018

Evolution of the voting scope between 2017 and 2018 +27%

99% Participation rate to general meetings*

* Rate restricted to the voting scope determined by the management company. The attendance rate at general meetings of LYXOR Asset Management on the whole general meetings held by issuers in voted funds, is 14%

(on the basis of 1,475 general meetings), regarding the voting scope defined by LYXOR.

The reasons why some votes could not be exercised are mainly related to malfunctions in the chain of

transmission of orders, and/or specific constraints such as blocking shares.

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Distribution of voted proposals by category

Proposals FOR 2 029 78%

Proposals AGAINST 57022%

ABSTENTIONS 13

Total number of voted proposals 2 612 100%

Proposals not approved by the board – vote for 4

Proposals not approved by the board – vote against 59

Votes distribution

In 2018, LYXOR International Asset Management objected or abstained at 22% of the voted proposals (as compared to 13% in 2017).

22%

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Opposition rate by country

As illustrated in the above graph, the opposition rate varies from one country to another. At the front of

countries where LYXOR International Asset Management has been the most confrontational is Italy, Belgium,

and Germany. By opposition, in the nordic countries such as the Netherlands or Ireland, the opposition rate is

much lower and remains below 10%.

By giving an overview of the opposition rate compared to the number of general meetings in which LYXOR

International Asset Management opposed or abstained to at least one of the proposals (graph below), it can be

noticed that 80% of general meetings in which LYXOR International Asset Management opposed or abstained to

at least one of the proposals concern Italian, French or Spanish companies.

In 2018, LYXOR International Asset Management opposed to at least one proposal at 153 general meetings, that is to say 77% (vs. 46% in 2017) of the voted general meetings.

77%

Distribution by country of general meetings in which LYXOR opposed or abstained to at least one proposal

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Details of general meetings concerned by at least one opposition from LYXOR Asset Management

CompanyGM’s

date

Number of

oppositionCompany

GM’s

date

Number of

opposition

Abertis Infraestructuras S.A 12-Mar 1 Bankia SA 10-Apr 2

Acciona S.A. 29-May 2 Bankinter S.A. 22-Mar 1

Accor 20-Apr 2 BMW 17-May 2

Acea Spa 20-Apr 2 Biesse SpA 23-Apr 3

Acerinox S.A. 09-May 1 Biesse SpA 20-Jun 2

Acs, Actividades de Construccion y Servicios S.A

07-May 4 BNP Paribas SA 24-May 2

adidas AG 09-May 4 Bouygues 26-Apr 4

Aeroporto Guglielmo Marconi Di Bologna SpA

24-Apr 2 Bper Banca 14-Apr 2

Amadeus IT Group SA 20-Jun 4 Brunello Cucinelli S.p.A. 19-Apr 2

Amplifon SpA 20-Apr 3 Capgemini 23-May 2

Anheuser-Busch InBev SA 25-Apr 14 Carrefour 15-Jun 10

Anima Holding S.P.A. 12-Mar 1 Cellnex Telecom S.A. 30-May 3

Anima Holding S.P.A. 21-Jun 2 Cementir Holding Spa 19-Apr 3

ANSALDO STS S.P.A. 10-May 2CIR-Compagnie Industriali Riunite SpA

26-Apr 4

ArcelorMittal 09-May 1 Claranova SA 29-Nov 29

ASCOPIAVE S.P.A. 26-Apr 3 Claranova SA 13-Dec 21

ASTM S.p.A. 20-Apr 3 Credit agricole SA 16-May 7

Atari 28-Sep 16 Credito Emiliano S.p.A. 01-Mar 1

Atos SE 24-May 1 Credito Emiliano S.p.A. 27-Apr 2

Autogrill Spa 24-May 2 Credito Valtellinese SpA 12-Oct 1

Axa 25-Apr 1 CRH plc 26-Apr 3

Banca Farmafactoring S.p.A. 05-Apr 6 Daimler AG 5-Apr 2

Banca IFIS S.p.A. 19-Apr 2Danieli & C. Officine Meccaniche SpA

26-Oct 5

BBVA 15-Mar 1 Datalogic Spa 23-May 7

Banco de Sabadell S.A 18-Apr 3 DE LONGHI S.p.A. 19-Apr 3

Bank Of Ireland Group Plc 20-Apr 1 Deutsche Bank AG 24-May 8

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CompanyGM’s

date

Number of

oppositionCompany

GM’s

date

Number of

opposition

Deutsche Boerse AG 16-May 2 Grifols SA 24-May 3

Deutsche Lufthansa AG 8-May 2 Gruppo MutuiOnline S.p.A. 24-Apr 2

Deutsche Post AG 24-Apr 1 HeidelbergCement AG 9-May 1

Deutsche Telekom AG 17-May 1 HERA SPA 26-Apr 2

Diasorin S.p.A 23-Apr 4 Iberdrola S.A. 13-Apr 1

Distribuidora InternacionalDe Alimentacion SA

19-Apr 2IGD - Immobiliare Grande Distribuzione

1-Jun 5

doBank S.p.A. 19-Apr 5 IMA S.p.A. 27-Apr 3

E.ON SE 9-May 4Infrastrutture Wireless Italiane S.p.A.

13-Apr 5

EI Towers SpA 23-Apr 4Inmobiliaria Colonial SOCIMI SA

23-May 8

El.En. S.p.A. 27-Apr 2International Consolidated Airlines Group SA

13-Jun 3

ENAV S.p.A. 27-Apr 1 Interpump Group Spa 23-Apr 4

Enel SpA 24-May 1 Intesa SanPaolo SPA 27-Apr 2

Engie 18-May 6 Italmobiliare SpA 18-Apr 1

Eni S.p.A. 10-May 1 Juventus Football Club SpA 25-Oct 3

ERG spa 23-Apr 6 KBC Groep NV 3-May 4

Essilor International 24-Apr 1 KBC Group SA/NV 4-Oct 1

EssilorLuxottica SA 29-Nov 3 Kering 26-Apr 3

F.I.L.A.SpA 27-Apr 3 L Oreal 17-Apr 2

Ferrovial SA 4-Apr 1 Linde Aktiengesellschaft 3-May 4

Fincantieri SpA 11-May 5 LVMH 12-Apr 8

FinecoBank Banca FinecoSpA

11-Apr 1 Maire Tecnimont S.p.A. 26-Apr 1

Fresenius Medical Care AG & Co. KGAA

17-May 2 Mapfre S.A. 9-Mar 5

Fresenius SE & Co KGaA 18-May 3 MARR S.P.A. 28-Apr 1

Gas Natural SDG S.A 27-Jun 9 Mauna Kea Technologies 13-Jun 17

GEOX SPA 17-Apr 4Mediaset EspanaComunicacion SA

18-Apr 12

GIMA TT SpA 27-Apr 3 Mediobanca SpA 27-Oct 1

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CompanyGM’s

date

Number of

oppositionCompany

GM’s

date

Number of

opposition

Merlin Properties SOCIMI, SA

6-May 4 Societe Generale 23-May 2

Nokia Corp. 30-May 2 Sodexo 23-Jan 7

Orange 4-May 6 Sol SpA 11-May 1

OVS SpA 31-May 1 Solvay SA 8-May 1

PARMALAT S.p.A. 19-Apr 4 Srp Groupe 14-Jun 12

Parrot 12-Jun 8 STMicroelectronics NV 31-May 3

Pernod Ricard SA 21-Nov 4Tamburi Investment Partners S.p.A

19-Apr 2

Peugeot SA 24-Apr 14 Technogym S.p.A. 8-May 3

Piaggio & C. S.p.A. 16-Apr 5 Tecnicas Reunidas S.A 27-Jun 4

Publicis Groupe 30-May 3 Tod's SPA 19-Apr 2

Rai Way S.p.A. 23-Apr 2 Total SA 1-Jun 1

RCS MediaGroup S.p.A. 26-Apr 2 UBI Banca SpA 19-Oct 1

Renault 15-Jun 1 Unibail Rodamco SE 17-May 1

Reply S.p.A. 23-Apr 7 UniCredit SpA 12-Apr 1

Repsol SA 10-May 1 Unilever NV 3-May 1

Royal Philips NV 19-Oct 1 Veolia Environnement 19-Apr 1

RWE AG 26-Apr 3 Vinci 17-Apr 1

Safran 25-May 1 VISCOFAN S.A. 24-May 3

Salini Impregilo S.p.A. 30-Apr 2 Vittoria Assicurazioni SPA 27-Apr 1

Sanofi 2-May 1 Vivendi 19-Apr 8

SAP SE 17-May 1 Volkswagen AG (VW) 3-May 39

Saras SPA 27-Apr 5 Vonovia SE 9-May 2

Schneider Electric SE 24-Apr 2 Zignago Vetro SpA 27-Apr 2

Siemens Gamesa Renewable Energy SA

23-Mar 1 Zodiac Aerospace 9-Jan 7

Societa Iniziative Autostradali e Servizi SpA (SIAS)

19-Apr 1

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3.2 Analysis of the opposition votes

Like the previous years, the main subjects of opposition for LYXOR International Asset Management in 2018

were concentrated on certain topics, such as:

• The financial operations and anti-takeover mechanisms (74% of opposition),

• The executives’ compensation (32%),• The composition and the remuneration of boards of directors or supervisory boards (24%).

Shareholders’ proposals will be presented in the following chapter.

Focus on financial operations

LYXOR supports a company’s entitlement to issue shares in order to raise capital, but directors should not

be given unlimited discretion. Capital raising should be limited to what is necessary to maintain business

operations and not lead to excessive dilution or cash-calls for existing shareholders.

Pre-emptive right is a fundamental shareholder right and when companies issue new shares, they should generally offer first these shares to existing shareholders. It is recognized though, that companies should

also be granted some flexibility to issue shares without pre-emptive rights to address company’s financial needs.

Distribution of oppositions from LYXOR International Asset Management

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Focus on executives’ compensation

Remuneration policies should be linked to the company's strategy and the amounts granted should reflect

the company’s performance. LYXOR votes on executives’ compensation-related items on a case-by-case basis, while taking into account global corporate governance best practice. In particular, LYXOR believes

that a board of directors should abide by the following general principle:

• Provide shareholders with clear and comprehensive disclosure and justification of chosen remuneration structures and levels in a timely manner;

• Maintain appropriate pay-for-performance alignment with emphasis on long-term shareholder value;• Include extra-financial criteria in line with the company’s sustainable strategy;• Avoid arrangements that risk “pay for failure”;• Maintain an independent and effective compensation committee.

Executives’ compensation should always include a long-term variable component with performance

conditions. This performance should be measured over a long-term period (at least 3 years). Criteria used in long term incentive plans (LTIP) should be disclosed, detailed, stringent enough and additional to short-

term variable remuneration.

Focus on boards composition and directors’ remuneration

The board of directors is the most powerful governing body of a company and should not pursue individual

shareholders’ separate interests but act in the interests of all the company’s different constituencies. All

actions taken by the board are expected to be governed by the principles of transparency, accountability,

effectiveness and availability.

The primary objective of the board is to provide independent oversight and evaluation of management and

to monitor the performance of the business in a way that promotes long-term sustainable growth of the

company, while ensuring that appropriate risk management systems and controls are in place.

The following are the key principles that boards should respect according to LYXOR:

independence diversity availability competence

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3.3 Shareholders’ proposals

Shareholders’ proposals are proposals which are not submitted to vote by companies’ governance bodies

(board of directors or supervisory board). Although these proposals remain not common, they are increasingand demonstrate a stronger shareholders’ engagement concerning companies’ governance.

In 2018, LYXOR International Asset Management voted on 16 shareholders’ proposals submitted to 6companies (excluding « list » proposals submitted to vote in Italy).

The shareholder DGFD SA, holding 5.12% of the capital of CreditoValtellinese, filed a proposal for revocation of the board of directors. The reasons for this request are based on the following three points:- Modification of the shareholding following the capital increase

carried out in 2018- The board of directors is responsible for the disappointing

financial performance of the company and in particular the obligation to carry out two capital increases in three years

- Some members of the board sold their own Credito Valtellineseshares, sending a worrying message to the shareholders who had participated in the capital increase or had their shareholding diluted.

Following the resignation of the board of directors a few days before the general meeting, the resolution was not submitted to the vote.

At Deutsche Bank general meeting, Karl-Walter Freitag added 7 resolutions on the agenda.These resolutions concerned various issues such as the spin-off of some activities, the removal of the Chairman of the supervisory Board, the appointment of special auditors to examine whether members of the management and supervisory boards breached their legal obligations and caused damage to the company.Not convinced by the arguments of the shareholder, LYXOR not supported the resolutions which obtained between 1 and 9% of support.

The Orange Actions savings plan’s mutual fund submitted 4 proposals, 3 relative to dividend (amount and

method of payment) and one proposal relative to the multiple directorships of Orange’s board members. LYXOR estimated that the dividend proposed by the company was aligned with Orange’s results and its financial

structure, and that a decrease of the amount of the dividend – as it was proposed by the Orange Actions saving

plan’s mutual fund – was not in the interest of shareholders. As for multiple directorships, even if it is essential

to assure board member’s availability, LYXOR estimated that limits set by the French Legislation were sufficient.

These proposals received between 13 and 14% support.

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Supporting the “one share - one vote” principle, two shareholders (DELPHI UnternehmensberatungAktiengesellschaft and Deutsche Balaton Aktiengesellschaft) proposed to convert the 39 million of non-voting preference shares of RWE into 39 million ordinary shares with voting right and update the bylaws to reflect this change.Despite the management's recommendation not to support the proposal, LYXOR voted in favor of the resolution in line with its voting policy. The resolution received 41% support.

The Central Work Council of UES Amont submitted a proposal for the purpose of amending the bylaws regarding a new procedure for selecting the employee shareholder director. LYXOR estimated that the positive evolution of this amendment, which was not supported by TOTAL’s board of directors, could not be proven and thus, decided not to support the proposal, which received 6% of favorable votes.

Iberdrola, one shareholder of Siemens Gamesa

Renewable Energy with 8% of the share’s

capital, added to the agenda of the annual

general meeting of the wind turbine

manufacturer, two additional proposals. The first one required the board of directors to

reinforce the company’s governance on the

approval of related-party transactions’ and the

protection of the minority shareholders.

Considering the interests of such a demand for

minority shareholders, LYXOR supported this proposal which obtained almost 23% of

favorable votes.

The second proposal required the board of directors to take the necessary measures to

maintain in Spain the Registered Office, the

Operational Headquarters of the Parent Company of the Group and the Headquarters of

the Onshore Business. As the proposal looks

excessive and the absence of a demonstrated

shareholder value creation, LYXOR did not support this proposal which registered 13% of

favorable votes.

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3.4 Non compliant votes according to LYXOR’ voting policy

In 2018, LYXOR International Asset Management deviated from the application of its voting policy in 7 cases:

When a company asks its shareholders to grantshares to its employees and / or managers, LYXORanalyzes the amount of the authorisation and theperformance conditions attached to the plan whenthey are available. In the case of EssilorLuxottica, theboard of directors has requested an authorisation toproceed with the award of free existing shares tocertain Luxottica group employees, replacing cashretention bonuses previously promised to them byLuxottica. Despite an amount greater than the limitretained by LYXOR and despite the absence ofperformance conditions, LYXOR supported theresolution in view of the exceptional context of themerger of the two companies.

LYXOR believes that the compensation of the members of the board of directors or supervisory board (includingthe Chairman) must be in line with their responsibilities and the time they devote to their duties on the Boardand committees, without compromising their ability to act independently. from the management. In otherwords, their remuneration should be linked to their attendance rate at board and committees’ meetings andnot be excessive so as not to jeopardize their independence.In the case of Anima Holding SpA, LYXOR supported the remuneration of the Chairman of the Board with regardto a reasonable amount and the practices of the Italian market.In the case of Italmobiliare SpA, LYXOR supported the resolution because, on the one hand, the proposal waslinked to the election of a board member to improve the board's independence rate; and on the other handthe proposed remuneration was reasonable and in line with the practices of the Italian market.

In order to support the renewal of a combinedChairman and Chief Executive Officer, LYXORanalyzes the level of independence of the board ofdirectors and expects at least one third of themembers to be independent for controlledcompanies and half of the members to beindependent for uncontrolled companies. L'Oréal'sshareholding was modified a few weeks before itsgeneral meeting following the end of theshareholders' agreement between the BettencourtMeyers family and Nestlé. This modification resultedin a re-qualification of L'Oréal into an uncontrolledcompany. Thus, LYXOR supported the renewal ofMr. Jean-Paul Agon, Chairman and Chief ExecutiveOfficer of L’Oréal, despite a level of independenceof the board of directors of less than 50% (40% atthe time of the analysis), considering that the timebetween the end of the shareholders’ agreementand the general meeting was too short for a changeof qualification.

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LYXOR attaches particular importance to the board ofdirectors’ diversity (gender, nationality, skills, etc.) andmay oppose the renewal of the chairman of thenomination committee if the proportion of women onthe Board is less than 40%. Following a conversationwith Telefonica, LYXOR decided to support thecompany in its positive dynamic since the proportionof women was increasing significantly over the threelast years, and support the reelection of the chairmanof the nomination committee despite a proportion ofwomen inferior to 40%.

When members of the board of directors or supervisory board are proposed for a reelection, LYXOR analyzes – whenthe information is disclosed – the attendance rate of the member. Indeed, LYXOR considers that a Board can only beeffective if all of its members dedicate the necessary time. In the event of an attendance rate of less than 75% at Board’meetings and committees’ meetings, LYXOR may oppose the renewal. At the general meeting of Vinci, LYXOR decided tosupport the renewal of a Board’ member, despite an attendance rate of less than 75% following a convincingexplanation provided by the company.

Concerning shares buyback programs, LYXOR verifiesthat authorizations may not be used during publicoffer period and thus, potentially be used as anti-takeover mechanisms. The board of director of PernodRicard has maintained in its proposal the potentialused of the authorization during a public offer period.Following a dialogue with the company, this last onetold LYXOR that this authorization is strictly restrictedto its passed plans, notably for the free shares plansgranted to executives and employees. In light of thisclarification, LYXOR considered that the authorizationcould not be used as an anti-takeover mechanisms,and finally supported the proposal.

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Footnote

1 The dialogue policy has been implemented in the name of LYXOR Group without distinction of one or the other

management companies (LYXOR Asset Management and LYXOR International Asset Management).

2 With the exception of vehicles using a synthetic method of replication in order to reproduce an financial

exposure through a performance swap. Therefore, the return of these vehicles does not depend on theperformance of actions owned. All dividends and profits are exchanged with a market counterpart.

3 In order to prevent the inherent excessive costs due to the voting process, LYXOR takes part at general

meetings when the consolidated ownership stand for more than 0.1% of the company’s capital.

3.5 Conflicts of interests management

In 2018, LYXOR International Asset Management did not identify any conflicts of interests as part of the exercise

of voting rights.

LYXOR International Asset Management’ voting details are available on LYXOR’s websitehttps://www.lyxor.com/en/socially-responsible-investment

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