Proxy Blog

L3 Technologies 

April 13, 2018

The annual proxy for this US defense contractor suppling communications technology had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposals on:
    -Written consent
    -Adopting targets for reducing greenhouse gas emissions 

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 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 and against shareholder proposals.
    -Against written consent – Shareholders proposing written consent tend to believe that such a capability enables passage of more shareholder proposals. The capability is a significant governance risk. A slight majority of shareholders would be able to amend bylaws in an opaque manner. Smaller shareholders could be placed at a disadvantage.
    -For adopting targets for greenhouse gas emissions – The company is fairly opaque with regard to environmental disclosure. The board recommended voting against the proposal based on a combination of the company’s good decision-making process on such matters and its adherence to relevant law. In addition to environmental disclosure being part of good governance, L3 Technologies is unusually opaque on the topic and that can make the stock less attractive to the large number of people that use Responsible Investing.