The annual proxy for this pharmaceutical company had the following proposals:
- Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote
- Shareholder proposals on:
Magni voted as follows:
- Magni voted for all 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 demonstrated that the board has more than considered shareholder feedback on executive compensation. In addition, the proxy materials disclosed the benchmarking done on executive compensation, including listing the peer group used in the benchmarking.
- Magni voted for and against shareholder proposals.
-Against written consent – Shareholders proposing written consent tend to believe that such a capability enables passage of more shareholder proposals. The capability is a significant governance risk. A slight majority of shareholders would be able to amend bylaws in an opaque manner. Smaller shareholders could be placed at a disadvantage.
-For independent chairman– An independent board is an important part of good governance. An independent chairman is an element of an independent board, though there are situations where an independent chairman does not make sense (e.g., Elon Musk and Tesla). Merck does not have one of those situations.