The annual proxy for this financial services company had the following proposals:
- Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote
- Shareholder proposals on written consent, impact of stock buyback on executive pay, and gender pay equity
Magni voted as follows:
- For and against 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 company provides a clear description of shareholder engagement activities. The peer group is listed, however the criteria for inclusion is vague and open to gerrymandering.
- Against shareholder proposals.
-Written consent – Per the Magni position paper, Magni routinely votes against written consent proposals.
-Impact of stock buyback on executive pay – The shareholder proposal was boilerplate material for use on proxies with many companies. The shareholder submitting the proposal believes buybacks are bad. Stock buybacks are a method for providing shareholder value when the company has more cash than good investment opportunities. Buybacks can have tax advantages for shareholders. As such, a company should not be restricted in its use of buybacks.
-Gender pay equity – Gender equity is an important issue. That said, there are two reasons for voting against the proposal. The first is the use of generic and inaccurate information in the shareholder’s supporting statement, along with the proposal requiring the company to report a misleading metric for gender equity. The second is the company’s prior and current efforts to address gender inclusion. The company has made good progress and should be encouraged to continue with its current efforts.