September 17, 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.
Written consent is a proxy proposal that is made by shareholders of a company. The intent of written consent is to change company bylaws to enable resolutions to pass without shareholder meetings thus making shareholder proposals easier to adopt. However, written consent, if adopted, could have very negative consequences. In companies with few entities owning sufficient shares to amend bylaws, those entities could adopt revisions to bylaws without full disclosure to all shareholders. Such opaqueness is inconsistent with best practices and places smaller shareholders at risk. Magni believes written consent, if enacted by a company, could be used in ways that are counter to shareholder best interests and hence inconsistent with corporate governance best practices.
One example is Newell Brands (NWL), a marketer of consumer and commercial products. The annual proxy contained proforma proposals from the board and one shareholder proposal about written consent. Newell receives a relatively high score from Magni for its corporate governance, however the proposal on written consent raised a red flag. The Newell board did not take a position on the issue and stated in the proxy that written consent has advantages and disadvantages. The aforementioned reasons lead Magni to believe that the disadvantages significantly outweigh the advantages. Based on Newell’s adherence to corporate governance best practices, Magni voted for the proforma proposals, but voted against the proposal on written consent.
Magni votes against proposals for written consent, unless the proposal explains unique reasons that provide sufficient advantages to offset the negative consequences. All of Magni’s votes on proxies are available at www.magniglobal.com/insights/magni-proxy-vote-commentary/.