Proxy Blog

3M Company

April 20, 2020

The annual proxy for this consumer goods company had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposal on setting target amounts for CEO compensation 

Magni voted as follows: 

  1. For proforma proposals.
    -Directors – The board has a majority of independent directors and some have CEO/CFO experience with other companies. The compensation of directors is disclosed with a meaningful portion in equity where the equity has restrictions to align director incentives with long-term value creation. 
    -Auditors – There appear to be no controversies with the financial statements of the company.
    -“Say-on-pay” – The proxy materials improved from last year. Magni can now vote for the “say-on-pay” proposal. That said, the company needs to continue to improve the disclosures. Compensation should be an explicit topic of the shareholder engagement. The vague criteria for the peer group needs to be made clearer and more precise. 
  2. Against the shareholder proposal on setting target amounts for CEO compensation  This proposal is the same as last year’s proposal. While Magni generally supports board’s decisions on compensation, if a process consistent with good governance is used, last year Magni voted for this proposal given the weaknesses in the company disclosures about executive compensationPer above, the disclosures have improved, though the company needs to continue improving. Magni no longer needs to signal to management on the need for improvement and, hence, voted against the proposal.