Proxy Blog


May 22, 2018

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.