Magni’s Position on Incentive Plan Proxy Proposals

Magni votes company proxies on behalf of clients and is guided in its votes by applying corporate governance best practices as described in Magni’s Sustainable Value Creation principles.

When Magni is voting a proxy, it means that one or more Magni clients have the associated security in an account. These accounts use a Magni Corporate Governance strategy so that the resulting portfolio contains the best governed companies, according to Magni research. Hence, the companies are already well run, and Magni is inclined to vote for proforma proposals. Each Magni vote on a company proxy is documented in a post published on Magni’s proxy blog.

No company is perfect, and all companies have opportunities for improvement. If the improvement areas overlap with a proposal, then Magni may vote against the board recommendation.

Most large public companies have compensation plans related to employees, management, executives, and/or directors obtaining equity in the company. These plans go by many names, including equity incentive plan, stock option plan, omnibus equity plan, and employee purchase plan. The proposals could be revisions to the plans or something specific, such as the authorization of additional shares eligible for plan use.

Across all of these plans is a common objective: align the interests of stakeholders with the success of the company. The objective is consistent with good governance, hence Magni typically votes for the related proposals.

The language in the proposal should explain the intent of the plan, why shareholder approval is required, and the major changes from prior plans. If Magni finds something objectionable either in the plan or in the language of the proposal, Magni votes against the proposal. If Magni votes against the decision, it along with an explanation is documented in the blog post.