Proxy Blog

Amgen

April 19, 2018

The annual proxy for this biotechnology company had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposal on tying drug prices to executive compensation 

Magni voted as follows: 

  1. Magni voted for the 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. The compensation levels are set using a benchmarking process.
    -Auditors. There appear to be no controversies with the financial statements of the company.
    -“Say-on-pay” Advisory Vote. The proxy materials demonstrated that the board has more than considered shareholder feedback on executive compensation. In addition, the proxy materials disclosed the benchmarking done on executive compensation, including listing the peer group used in the benchmarking.

  2. Magni voted against the shareholder proposal. The executives should have the autonomy to use the pricing that the executives deem to be in the best long-term interests of the company. High drug prices are an indicator of a lack of competition. If the shareholder wants to limit price increases, then the shareholder should pursue regulatory changes that enable new competitors.