The annual proxy for this provider of equipment, software, and services for the semiconductor industry had the following proposals:
- Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote
- Board proposals related to equity incentive and purchase plans
- Shareholder proposals on independent chairman and on changes to CEO compensation
Magni voted as follows:
- 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.
- For board proposals related to equity incentive and purchase plans. Per Magni policy, Magni votes in favor of many of these proposals. Neither proposal contained material warranting a vote against it.
- 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.