Proxy Blog

Applied Materials, Inc. 

February 22, 2021

The annual proxy for this provider of equipment, software, and services for the semiconductor industry had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Board proposals related to equity incentive and purchase plans 
  3. Shareholder proposals on independent chairman and on changes to CEO compensation 

Magni voted as follows: 

  1. For all proforma proposals.
    Directors – The disclosures in the proxy meet the criteria in Magni’s policy on election of directors.
    -Auditors – The company meets the criteria in Magni’s policy on auditor ratification.
    -“Say-on-pay” – The disclosures in the proxy meet the criteria in Magni’s policy on the advisory vote. 
  2. For board proposals related to equity incentive and purchase plansPer Magni policy, Magni votes in favor of many of these proposals. Neither proposal contained material warranting a vote against it. 
  3. For and against shareholder proposals.
    For independent chairman – Per the Magni position paper, Magni routinely votes in favor of these proposals.
    -Against CEO compensation – Magni considers the topic of compensation, especially CEO compensation, to be important. This company meets Magni criteria for disclosure in the proxy statement. The shareholder proposal contains a small amount of generic material without citing anything specific to the company. The proposal to include the CEO pay ratio in compensation design has a large adverse consequence. A CEO who seeks to maintain the current level of pay can reduce the number resulting from the ratio by outsourcing all low-paid work to independent companies. Such action is unlikely to serve the interests of the impacted employees, the company shareholders, or any other stakeholder in the company. A generic proposal which does not address consequences should not be adopted, especially when the company has good compensation disclosures.