The annual proxy for this healthcare company had the following proposals:
- Proforma votes on directors, the appointment of auditors, and executive compensation
- Board proposals to eliminate supermajority voting standards
- Shareholder proposals covering lobbying disclosure and racial justice
Magni voted as follows:
- For and against proforma proposals.
–For and against directors – The disclosures meet the criteria in Magni’s policy on election of directors with one exception. One year ago, we stated that Daniel Starks, a legacy director from the St. Jude acquisition, did not have a role that justified his continued placement on the board. The commentary justifying his presence on the board provides a pro-forma statement about providing medical device expertise. The acquisition occurred several years ago. If the company wants Mr. Starks on the board, a more compelling case needs to be made.
-For auditors – The company meets the criteria in Magni’s policy on auditor ratification.
-Against advisory vote – The disclosures in the proxy did not meet the criteria in Magni’s policy on the advisory vote.
- For board proposals to eliminate supermajority voting standards – Last year the proxy had a shareholder proposal to require simple majority votes. The proposal was written poorly and very generic. We voted against it. This year the board came forward with two specific areas to eliminate supermajority voting requirements: (1) amendments to articles of incorporation and (2) certain extraordinary transactions. We routinely vote in favor of removing supermajority voting requirements, so the decision was easy. In future years, we remain open to supporting elimination of supermajorities in other areas.
- For and against shareholder proposals.
–Against report on lobbying activities – This proposal resembles one last year. We voted against it for the same reasons as last year.
The company already provides good disclosures of lobbying activities. This proposal seeks to lump industry group activities with political activities. There are good reasons for a company to participate in an industry group. Many of those reasons are unrelated to lobbying. Assuming all such industry activity as political is wrong.
-Against report on racial justice – Diversity & inclusion are more than important issues; the tragic death of George Floyd highlighted the significant work which remains. That said, Abbott is the wrong target for this proposal. In addition to making a commitment to publish new diversity & inclusion disclosures, the company is award winning (e.g., DiversityInc since 2004, Forbes, Vault, DiversityPlus). Should the company produce a disappointing diversity & inclusion report, or should the company stop receiving relevant awards in this area, then we would support this sort of proposal.
-For independent chairman – Per the Magni position paper, Magni routinely votes in favor of these proposals.