Proxy Blog

Johnson Controls

February 6, 2019

This manufacturing conglomerate’s annual proxy had the following proposals:

  1. Proforma votes on directors and appointment of auditors
  2. Proforma European votes on annual confirmation of authorities

Magni voted as follows:

  1. Magni voted for all 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” – The proxy materials did not disclose any shareholder engagement efforts. The advisory vote language was pro-forma with no serious evidence that the vote matters.
  2. For European proforma proposal. 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. In this case, the lack of a proxy is a form of opaqueness, and opaqueness is incompatible with good governance. That said, Magni voted for the accounts and authorities since in the U.S. the topics are not matters requiring shareholder votes.