Proxy Blog

3M Company 

May 3, 2019

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 and against all proforma proposals.
    -For 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. 
    -For auditors – There appear to be no controversies with the financial statements of the company.
    -Against Say-on-pay” – The proxy materials had information about shareholder engagement, though compensation was specifically not a topic of conversationThe peer group was listed, and the criteria was mostly objective. The company needs to collect feedback on compensation as part of shareholder engagement and address the remaining opaque elements of the process for selecting the peer group. 
  2. For the shareholder proposal on setting target amounts for CEO compensation. Generally, Magni is supportive of board’s decisions on compensation, if a process consistent with good governance is used. This company has weaknesses in its process (see above). Magni’s vote in favor of the shareholder proposal is intended to signal to management the need to improve the process.