Proxy Blog

Gilead Sciences, Inc. 

April 16, 2019

The annual proxy for this biotechnology company had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Board proposal on written consent 
  3. Shareholder proposals on independent chairman and report on use of savings from the Tax Cuts and Jobs Act 

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.
    -“Say-on-pay” Advisory Vote – The shareholder engagement and peer group disclosures indicate good governance practices in executive compensation, though the specific criteria for the peer group should be stated. 
  2. For the board proposal to allow written consentNormally Magni votes against proposals to act by written consent as minority shareholder rights can get trampledThis proposal is different. A “written consent” shareholder proposal on a prior proxy generated majority support. The company, as with Magni, was concerned about minority shareholder rights. The board added protections for minority shareholders. With these modifications, the written consent proposal is more than acceptable. 
  3. For and against the shareholder proposals. 
    -For independent chairman – Magni wrote a position paper regarding shareholder proposals for independent chairman. 
    -Against report on use of savings from the Tax Cuts and Jobs Act  This company has good governance practices. The annual capital budget for the company is not submitted for shareholder approval, and disclosure is voluntary. As such, the savings should be treated the same way.