The annual proxy had the following proposals:
- Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote
- Board proposals on:
-Amend the stock option plan to increase share reserve
-Amend the employee purchase plan to increase the share reserve
-Ratifying the stockholder special meeting provisions in existing bylaws
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” Advisory Vote. 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 board proposals.
-For the increased shares to be used in the stock option plan. The executive compensation disclosures appeared complete with NETAPP: (1) engaging shareholders in discussions about compensation; (2) listening to the feedback on the “say-on-pay” vote; and (3) documenting the compensation benchmarking process.
-For the increased shares to be used in the employee stock purchase plan. The complete executive compensation disclosures established sufficient comfort with the compensation program that Magni voted for this proposal.
-Against ratification of the stockholder special meeting provisions in existing bylaws. The current NETAPP threshold is 25% of shares, and NETAPP wants shareholder support for this threshold. The number is high. The primary objection from NETAPP (and other companies) to a lower threshold is the burden of holding a special meeting. Very few shareholder-initiated special meetings occur. A strong relationship with shareholders means making sure they have a voice. The threshold should be lower.