Proxy Blog

LyondellBasell Industries N.V. 

May 10, 2019

The annual proxy for this chemical company had the following proposals: 

  1. Proforma proposals on directors, appointment of auditors, and executive compensation 
  2. Proforma European proposals on approval of accounts and annual confirmation of authorities 
  3. Board proposal on longterm incentive plan 

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 contained information about shareholder engagement efforts, and executive compensation was a potential topic. The information was high level and provided few specifics on actual activities. If the peer group criteria were objective, then the engagement efforts would be marginally sufficient for Magni to vote for the proposal. The peer group was listed but it was not clear how literally the criteria were applied. There was very little data about how the company compares to the peer group. The company needs to be more transparent to get Magni’s support. 
  2. For European proforma proposalsUnder US laws and regulations, these matters are handled by the board, thus the topics do not warrant votes by shareholders of US companies. Magni usually votes in support of these topics, unless some controversy or issue has arisen that requires additional investigation or justifies a vote against. No material controversies or issues were identified. 
  3. For board proposal. Longterm incentive plans are a good tool for aligning management of a company with shareholder interests. The amendments to the existing plan are relatively minor and the changes are consistent with good governance.