Proxy Blog

Edwards Lifesciences Corporation 

April 22, 2020

The annual proxy for this life sciences company had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Board proposals on nonemployee directors stock incentive plan and increase authorized shares for stock split 
  3. Shareholder proposal on written consent 

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” – Magni also voted against this proposal in 2019. This year the company made some improvements to the relevant disclosures. That said, the improvements did not address the biggest issues. The disclosure needs to include a benchmarking of the company against the peer group, as well as greater transparency into the peer group criteria. 
  2. For and against board proposals.
    -For nonemployee directors stock incentive plan – Incentive plans are a good tool for aligning directors with shareholder interests.
    -Against increase authorized shares for stock split – The decision on this vote was difficult. In general, stock splits are a minor issue. Further, authorizing additional shares in support of such a decision is not controversial. Magni voted against this proposal for two reasons. First, it does not address the preferred shares. It is unclear what happens to those shares. The absence of any information about the impact on those shares is a source of significant consternation. Second, there is a discussion of having more shares for acquisitions. Acquisitions can be an important source of growth for companies, though many acquisitions do not increase shareholder value; some destroy shareholder value. It is not clear how additional shares help with acquisitions. If the increased authorization was limited to the amount of the stock split, then there is no additional “purchasing power” from the authorization. If the authorization was larger than required for the split, the materials should clarify the number of shares becoming available for acquisition. The issue on this second point is the lack of clarity in the disclosure, as opposed to the numbers of shares being authorized. 
  3. Against shareholder proposal on written consent – Per the Magni position paper, Magni routinely votes against these proposals.