The annual proxy for this toy manufacturing company had the following proposals:
- Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote
- Board proposal for amending the equity and long-term compensation plan
- Shareholder proposal on proxy access
Magni voted as follows:
- For the 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.
-Auditors – There appear to be no controversies with the financial statements of the company.
-“Say-on-pay” – The proxy documents extensive shareholder engagement where the primary topic was compensation. The company clearly made changes based on some strong feedback. The peer group was changed to include companies previously considered too small. The company revealed that the CEO compensation is now above the median for the peer group. While the criteria for the peer group is subjective, Magni voted in support of this proposal based on the responsiveness of the board to shareholder feedback. In coming years, the company will need to be more transparent about the criteria for inclusion in the peer group.
- For the board proposal. Long-term incentive plans are a good tool for aligning management of a company with shareholder interests. The amendments to the existing plan are relatively minor and the changes are consistent with good governance.
- Against the shareholder proposal. The existing practices for proxy access are comparable to other companies with good governance. The shareholder proposal effectively provided for a director to stand election repeatedly over many years, despite being unsuccessful through a nomination from shareholders representing a small minority of shares and the candidate receiving a few votes in each election.