Magni’s Position on Proxy Independent Chairman Proposals 

October 2, 2018 

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. 

Requiring an independent chairman is a proxy proposal that is made by shareholders of a company. The intent of the proposal is to require a separation of the CEO and Chairman roles in order to increase the independence of the board. This is one of the key items ESG rating services look at when evaluating companies. However, an independent chairman does not, in and of itself, guarantee an independent board. Further, there are situations where an independent chairman does not make sense. For example, a company founder who is still CEO may be so closely related to the company brand that placing an independent chairman would hurt the brand and create risks to the valuation of the company. 

The annual proxy from Union Pacific (UNP), a railroad company, contained proforma proposals from the board and one shareholder proposal to require an independent chairman. Union Pacific receives a relatively high score from Magni for its corporate governance and Magni voted for the proforma proposals. Magni also voted for the proposal to require an independent chairman since Union Pacific does not have unique circumstances where an independent chairman would create an issue.  

Magni votes in favor of proposals regarding independent chairman, unless there is some specific issue that is sufficiently significant to offset the positive consequences. All of Magni’s votes on proxies are available at .