Proxy Blog

Mastercard Incorporated 

May 17, 2019

The annual proxy for the credit and debit card provider had the following proposals: 

  1. Proforma proposals on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposals on gender pay and human rights committee 

Magni voted as follows: 

  1. For proforma proposals.
    -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. The compensation levels are set using a benchmarking process.
    -Auditors – There appear to be no controversies with the financial statements of the company.
    -“Say-on-pay”  The proxy materials disclosed the shareholder engagement program, which included discussions of compensation. The peer group was listed, along with the process and criteria. The company was compared to the peer group on the financial metrics used in the process of determining the peer group, and the company was mostly larger than the companies in the peer group, thus reducing the risk of compensation benchmarks being set too high. While this transparency was enough to warrant Magni’s vote, the company should be clearer about the portion of shares represented in the shareholder engagement efforts. 
  2. Against shareholder proposals.
    -Gender pay – Gender equity is an important issue. That said, there are two reasons for voting against the proposal. The first is the use of generic and inaccurate information in the shareholder’s supporting statement, along with the proposal requiring the company to report a misleading metric for gender equity. The second is the company’s prior and current efforts to address gender inclusion. The company has made good progress and should be encouraged to continue with its current efforts.
    -Human rights committee – Any company is at risk when its operations exist in regions of the world where conflict occurs. Companies should not avoid those locations, especially companies such as this one where its products are an important part of making the location better. Companies need to have good governance to minimize risks. This proposal acknowledges that the company considers this issue important and that the company has a history of good conduct. The proposal would require Mastercard to go further to mitigate risks by establishing a human rights committeeThis company receives a high score from Magni for its corporate governance. Companies with high scores are less likely to have issues. Magni would vote for such a proposal in companies with weaker governance or a history of issues.