BRF S.A., a Brazilian food company, provided its annual proxy. This proxy had the following board proposals:
- Increase in director compensation
- Revise restricted share plan to support director compensation
- Indemnify board members for actions not covered by D&O insurance
As with many foreign companies, disclosures are substantially below US (and European) standards. Magni voted as follows:
- Against increase in director compensation – The proposal sought a 60% increase. No explanation or justification was provided.
- For revision to restricted share plan – Every board needs access to sufficient shares to meet commitments from approved compensation plans. If not, the company is not meeting a commitment. If the compensation is too generous or too much equity is provided, the issue should be fought when the compensation is submitted for shareholder approval.
- Against indemnification of board members – if an action by a board member is not insurable, why would the shareholders indemnify the directors? If the board has specific reasons for needing the indemnification, the specific reasons should be submitted as a proposal. The current proposal makes the company opaquer and, hence, less well governed.