Proxy Blog

Cigna Corporation 

April 8, 2019

The annual proxy for this financial services company had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposals on written consent, cyber risk report, and gender equity 

Magni voted as follows: 

  1. For all proforma proposals.
    -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. Given recent news about Wells Fargo, changes clearly need to be made. Only two of the directors have long tenure on the board, so Magni did not see a need, for now, to make changes to the board.
    -Auditors – There appear to be no controversies with the financial statements of the company.
    -“Say-on-pay” – The proxy materials discussed a shareholder engagement effort with compensation being one of the topicsThe peer group for compensation benchmarking was identified, though the criteria for inclusion in the peer group was vague. While flawed, enough of the basic process for good governance is in place to justify a vote for the proposal. 
  2. Against the shareholder proposals.
    -Proposal on written consent. Per the Magni position paper, Magni routinely votes against written consent proposals.
    -Proposal for a report on cyber risk. The topic of cyber risk is very important given the number of scandals involving intrusion into company systems or inappropriate disclosure of information. That said, Magni voted against the proposal as it is unclear how a report would actually improve cyber security. The management and board should understand that systems and data are strategic assets of the company. A failure to protect these assets is a performance issue for all of them. As with Experian, should a cyber scandal occur and the evidence show that the company had not taken reasonable precautions, then the management and board should be accountable for the failure (e.g., they could well be fired).
    -Proposal on gender equity. Gender equity is an important issue. That said, there are two reasons for voting against the proposal. The first is the use of generic and inaccurate information in the shareholder’s supporting statement, along with the proposal requiring the company to report a misleading metric for gender equity. The second is the company’s prior and current efforts to address gender inclusion. The company has made good progress and should be encouraged to continue with its current efforts.