Proxy Blog

Dominion Energy, Inc. 

April 10, 2019

The annual proxy for this power and energy company had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Board proposal to increase the number of authorized shares 
  3. Shareholder proposal on independent chairman 

Magni voted as follows: 

  1. For 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. The compensation levels are set using a benchmarking process.
    -Auditors – There appear to be no controversies with the financial statements of the company. 
  2. “Say-on-pay” Advisory Vote – The shareholder engagement and peer group disclosures indicate good governance practices in executive compensation.
    -Against the board proposal to increase the number of authorized sharesThe proposal would increase the authorized shares by 75%. In the explanation of why the proposal was needed, the proxy contained a statement about using the shares for strategic acquisitions. The increase in shares is too large and presents a significant dilution risk to existing shareholders. At the same time, increasing the authorized shares simplifies the board process for making a large acquisition. Large acquisitions have a low probability of creating shareholder value. Shareholders are better served by a small increase in authorized shares and retaining greater controls to prevent a large, high-multiple acquisition. 
  3. For the shareholder proposal. Magni wrote a position paper regarding shareholder proposals for independent chairman. The recent experience of this company is evidence of the need for an independent chairman.