Magni’s Position on Proxy Proposals for Lowering Threshold on Special Meetings

October 15, 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.

Company proxies often have a shareholder proposal to lower the threshold for special meetings. Company boards tend to resist lowering the threshold for special meetings, and typically the boards use the cost of special meetings as the reason to not support the shareholder proposal.

Special meetings are a way for shareholders to make sure the board understands shareholder expectations. Shareholder engagement is an important part of good governance. Given that special meetings rarely occur, board objections about the cost are hypothetical as opposed to substantive.

The annual proxy from Lowe’s Companies (LOW), a home improvement and appliance retailer, contained proforma proposals from the board and one proposal from shareholders to lower the threshold for special meetings. Lowe’s Companies receives a relatively high score from Magni for its corporate governance, and Magni voted for the proforma proposals. Magni also voted for the shareholder proposal to lower the threshold.

The annual proxy from Quest Diagnostics (DGX), a clinical laboratory company, contained proforma proposals from the board and both a shareholder and a board proposal to lower the threshold for special meetings. The board proposal lowered the threshold less than the shareholder proposal. Quest Diagnostics receives a relatively high score from Magni for its corporate governance, and Magni voted for the proforma proposals. Magni also voted for both proposals because it believes that lowering of the threshold is good for shareholders.

Magni will almost always vote in favor of proposals regarding lowering the threshold for special meetings. All of Magni’s votes on proxies are available at www.magniglobal.com/insights/magni-proxy-vote-commentary/.

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