Proxy Blog

Intercontinental Hotels 

April 19, 2018

The annual proxy for this international hotel company had the following proposals: 

  1. Proforma votes on directors and appointment of auditors 
  2. Proforma European-style votes on approval of accounts, annual confirmation of authorities, and compensation plans 
  3. Board proposal for new Articles of Association 

Magni voted as follows:

  1. For and against proforma proposals:
    -For and against 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.
    Mr. Maalouf is a general manager in the company. He is also the third executive on the board. Two executives (usually the CEO and CFO) are sufficient, so Magni voted against Mr. Maalouf.
    -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. For and against European-style proforma proposals. Under US laws and regulations, these matters are handled by the board, thus the topics do not warrant votes by shareholders of US companies. Magni usually votes in support of these topics, unless some controversy or issue has arisen that requires additional investigation or justifies a vote against. No material controversies or issues were identified.
    The Directors’ Remuneration Report is very incomplete. Transparency is a foundation of good corporate governance. Even though this matter doesn’t require a vote when the company is based in the US, Intercontinental Hotels is not a US company, and the regulations covering them do require a vote on this report. The incomplete nature of the report caused Magni to vote against it.

  3. Against Board proposal on new Articles of Association. The shareholder materials did not contain an explanation of the changes. Beyond the opaqueness involving unidentified changes to a core governance document, having a shareholder vote where the changes and consequences of the changes are not discussed is very poor governance.