The annual proxy for this software company had the following proposals:
- Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote
- Shareholder proposals on:
-Employee representation on the board
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 materials demonstrated that the board has a shareholder engagement program where the level of activity was disclosed and the topic of compensation was included in the discussion. The peer group was disclosed, along with the process for determining the participants and benchmarking to show that the company compared to the peer group on the major criteria, including market capitalization.
- Against the shareholder proposals.
-Employee representation –Generally, a company should have the latitude to suggest director candidates that best meet the its interests. The shareholders then get the opportunity to approve (or reject) those candidates. The company receives relatively a high governance score, including in its employee relationships. At this point, Magni does not see the need to require employee representation on the board.
-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.