The annual proxy for this snack company had the following proposals:
- Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote
- Shareholder proposals on environmental impact of cocoa supply chain and consideration of employee pay in setting CEO pay
Magni voted as follows:
- For and against proforma proposals.
-For 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.
-For auditors – There appear to be no controversies with the financial statements of the company.
-Against “say-on-pay” – The proxy materials discussed shareholder engagement and specifically identified compensation as a discussion topic. The peer group was listed, though the criteria for inclusion were vague and subject to gerrymandering.
- For and against shareholder proposals.
-Against requiring additional disclosure on cocoa supply chain – Cocoa production can have significant negative environmental impact. This company uses a lot of cocoa and should be a leader in mitigating the impact. That said, the shareholder proposal is generic without specific identification of shortcomings in the company’s efforts. In response, the company identified efforts and current disclosure practices. The Cocoa Life website is used for disclosure. Since the proposal did not acknowledge the company’s efforts, document current issues not being managed by the company, or identify problems with the Cocoa Life disclosure process, Magni voted against the proposal. If there are shortcomings, a subsequent proposal documenting the shortcomings would likely receive Magni support.
-For consideration of employee pay in setting CEO pay. Generally, Magni is supportive of a board’s decisions on compensation if a process consistent with good governance is used. This company has weaknesses in its process (see above). Magni’s vote in favor of the shareholder proposal is intended to signal to management the need to improve the process.