Proxy Blog

Carmax, Inc. 

May 29, 2019

The annual proxy for the nationwide used car dealer had the following proposals: 

  1. Proforma proposals on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Board proposal on stock incentive plan 
  3. Shareholder proposal on disclosure of political contributions 

Magni voted as follows: 

  1. For and against proforma proposals.
    -For 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. 
    -For auditors. There appear to be no controversies with the financial statements of the company.
    -Against “say-on-pay” – The proxy materials disclose a commitment to shareholder feedback, though no activity was disclosed. The materials disclose the peer group, though the criteria is high level. The materials did not include a comparison of the company to the peer group. The disclosures regarding executive compensation remain opaque, and opaqueness is inconsistent with good governance. 
  2. For board proposal. Equity incentive plans are a good tool for aligning management of a company with shareholder interests. The amendments to the existing plan are relatively minor and the changes are consistent with good governance. 
  3. Against shareholder proposalThe company already discloses political activities. This proposal mostly seeks to lump industry group activities with political activities. There are good reasons for a company to participate in an industry group. Many of those reasons are unrelated to lobbying. Assuming all such industry activity as political is wrong.