The annual proxy for this commercial and investment banking institution had the following proposals:
- Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote
- Shareholder proposals on:
-Lowering threshold for special meetings
-Eliminating equity vesting for government service
-Investments tied to genocide
Magni voted as follows:
- Magni voted for and against the proforma proposals.
-For 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.
-For auditors – There appear to be no controversies with the financial statements of the company.
-Against “say-on-pay” Advisory Vote and related compensation matters – The peer group used for benchmarking purposes was either not provided or well-hidden in the proxy materials.
- Magni voted for and against shareholder proposals.
-For lower threshold for special meetings – Shareholder engagement is an important part of good governance. Special meetings are a way for shareholders to make sure the board understands shareholder expectations. A low threshold encourages shareholder engagement. The primary objection of boards to lowering the threshold is the cost of holding special meetings. Given that special meetings rarely occur, the objection is hypothetical as opposed to substantive.
-For independent chairman – An independent board is an important part of good governance. An independent chairman is an element of an independent board, though there are situations where an independent chairman does not make sense (e.g., Elon Musk and Tesla). JP Morgan does not have one of those situations.
-Against eliminating equity vesting for government service. The proposal appears to be an attempt to keep executives from benefiting from JP Morgan equity performance while going into government service. Experienced executives can be very good members of government. Every person in a governmental policy making position is already subject to extensive conflict of interest rules. JP Morgan should not be impeding talented people from serving in government.
-Against investments tied to genocide – Genocide is a significant issue. Preventing an American business from doing business in proximity to genocide is more about making a statement of values than about changing the situation. American businesses can be a force for good. JP Morgan should be engaged in countries and JP Morgan should be active in improving conditions. If JP Morgan is investing in areas tied to genocide and those investments are enabling more genocide or complicit in the genocide, then the shareholders need to let the board know such investments are not acceptable.