Proxy Blog


May 8, 2018

The annual proxy for this social media company had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposals on:
    -One share/one vote
    -Risk oversight committee
    -No supermajority requirements
    -Content governance report
    -Median pay by gender
    -Tax principles 

Magni voted as follows: 

  1. Magni voted for the 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.
    “Say-on-pay” Advisory Vote. The proxy materials demonstrated that the board has more than considered shareholder feedback on executive compensation. In addition, the proxy materials disclosed the benchmarking done on executive compensation, including listing the peer group used in the benchmarking.

  2. Magni voted for and against shareholder proposals.
    -For one share/one vote – Equal voting power across all shares is consistent with good shareholder relationships and part of good governance.
    -For adding a risk oversight committee – Facebook has experienced a series of embarrassing issues where systemic weaknesses in risk management were part of the problem. Magni is less concerned whether the committee, as proposed, is implemented. Facebook needs stronger risk management.
    For elimination of supermajority requirements – Generally supermajority requirements are inconsistent with good governance, though there can be situations where such requirements are acceptable. Given some of the company’s recent issues, Facebook would have stronger governance if the board felt more exposed to the opinions of all shareholders.
    -Against content governance report – The shareholder proposal was vaguely worded, so it would be unclear how to implement it. The supporting statement accompanying the proposal came across as more of a fishing expedition. Good governance is about transparency and content management is a big issue at Facebook. As Facebook reacts to recent issues, it will do more content management for its users. Whatever it does, the actions should be disclosed.
    -Against median pay by gender – Social justice is an important part of good governance. Social justice strengthens stakeholder relationships, particularly employee relationships. Most companies need to continue to do more for social justice. Silicon Valley companies have bigger issues with treatment of women than many other organizations. That said, the supporting statement emphasized data from a widely-discredited pay gap study where level of job, experience level in job, and many other factors were not considered. Establishing widely-discredited data as the standard for comparison is dysfunctional and would not be helpful to the company.
    -Against statement on tax principles – The shareholder proposal was aimed at limiting Facebook’s ability to minimize taxes through legal means. It is in the interest of shareholders for a company to use legal means to reduce the tax burden. The shareholder’s efforts would be better focused on changing laws and regulations to make undesirable tax minimization techniques illegal.