Proxy Blog

Leidos Holdings, Inc.

April 2, 2020

The annual proxy for this technology and services company had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Board proposals on eliminating cumulative voting and supermajority provisions 
  3. Shareholder proposal on proxy access 

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. 
    -For auditors – There appear to be no controversies with the financial statements of the company.
    -Against “Say-on-pay” – The proxy materials did not disclose a shareholder engagement program. The peer group was listed, though there was no explanation of the criteria or benchmarking of the company against the peer group. 
  2. For board proposals.
    -Eliminate cumulative voting – New approaches to voting (e.g., cumulative voting, ranked choice) have some theoretical advantages. At the same time, these approaches make the voting process more complicated and explaining results becomes more difficult. The more common approach of voting without cumulative rights has served companies well and is considered good governance. 
    -Eliminate supermajority – Many supermajority requirements are a legacy of the 1980s. 
  3. For shareholder proposal – Enabling shareholder interaction is part of good governance. Generally, Magni votes for proposals that encourage and/or enable such interaction.