Proxy Blog

Kroger Co.

May 30, 2018

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

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Board proposals on:
    -Proxy access
    -Board amendments 
  3. Shareholder proposals on:
    -Unrecyclable packaging and renewable energy
    -Independent chairman 

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” 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. Magni voted for board proposals.
    -Proxy Access. The board proposed making proxy access easier. Simplifying and easing the process for shareholders to place proposals on proxies is part of strong shareholder relationships and consistent with good governance.
    -Board amendmentsThe proposed changes were fairly minor and in response to changes in Ohio state laws.

  3. Magni voted for and against shareholder proposals.
    -Against proposal on Unrecyclable packaging and renewable energy. Magni is supportive of environmental efforts, and such efforts are part of good governance. Generally, Magni will support these sorts of proposals. This specific proposal would be burdensome, and the company already has strong environmental programs.
    -For proposal on Independent chairmanAn independent board is an important part of good governance. An independent chairman can be part of an independent board, though there will be cases where an independent chairman does not make sense. For example, Elon Musk is uniquely positioned to be both CEO and Chairman of Tesla. Forcing an independent chairman on Tesla would be a mistake. In the case of Kroger, there are no material mitigating factors that would cause Magni to vote against an independent chairman.