Proxy Blog

International Business Machines Corp. 

April 3, 2019

The annual proxy for this information technology company had the following proposals: 

  1. Proforma votes on directors, the appointment of auditors, and executive compensation 
  2. Vote on board proposal regarding terms of long-term incentive 
  3. Votes on shareholder proposals covering political contributions and lobbying expenditures 

Magni voted as follows: 

  1. For and against proforma proposals:
    -For and against directors  The director compensation does not include equity and hence does not help align the directors with the interests of the shareholders. The CEO is also the Chairman. If the company had been performing well, then these variances from good governance would be acceptable. The company has struggled for multiple years. Hence, Magni voted against the CEO, Ms. Rometty. Magni also voted against the “Directors & Corporate Governance” committee for not addressing the governance issues. These directors are Ms. Howard, Ms. Jackson, and Mr. Taurel.
    -For auditors  There appear to be no controversies with the financial statements of the company.
    -For “Say-on-pay” Advisory Vote – The shareholder engagement and peer group disclosures indicate good governance practices in executive compensation. 
  2. Against board proposal regarding terms of long-term incentive. The terms appear mainly to provide tax advantages to senior executives. This company has immediate issues and it is the wrong time to focus on long-term incentives. 
  3. For and against shareholder proposals:
    -Against proposal on written consent. Per the Magni position paper, Magni routinely votes against written consent proposals.
    -For proposal on independent chairman. Magni wrote a position paper regarding shareholder proposals for independent chairman. This company is a specific example of when the shareholders would benefit significantly from a separation of roles.