Proxy Blog

Kohl’s Corporation 

April 16, 2019

The annual proxy for this retail chain had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposals on political disclosure and vendor policy regarding animal welfare 

Magni voted as follows: 

  1. For and against 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 – Shareholder engagement is not addressed in the proxy.  
  2. Against the shareholder proposals. 
    -Political disclosure  The shareholder proposal is generic and does not contain specific deficiencies of the company. The company has policies and disclosures that address the substance of what the shareholder is proposing. Adopting this proposal would not provide meaningfully more relevant disclosure, while increasing compliance costs.
    -Vendor policy regarding animal welfare  This vote was tough. Protecting animal welfare is an important issue, and the proposal identifies some deficiencies with the company’s disclosures. The proposal requests a policy, while avoiding prescriptive language. Collectively, the shareholder proposal is logical, though a proposal requesting greater disclosure, as opposed to a policy, would be better. The company already has practices that are at least as strong as most companies, while the level of disclosure is comparable. Magni chose to vote against the proposal in order to give the company time to consider additional disclosure. If the company does provide additional disclosure in the coming year, then shareholders can determine whether policy and practices should change. If the company does not provide additional disclosure, Magni is likely to vote for such a proposal in future years.