Proxy Blog

NiSource, Inc. 

April 17, 2019

The annual proxy for this utility had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Board proposals on increasing authorized shares, eliminating “cause” as a reason to remove directors, and amending the Employee Stock Purchase Plan 
  3. Shareholder proposal on threshold for special meetings 

Magni voted as follows: 

  1. 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 did not discuss actual shareholder engagement efforts and instead only made a commitment to do soThe peer group was listed, but the process and criteria were vague. The company needs to demonstrate good behaviors, instead of just “checking the box” on management of compensation.
  2. For and against board proposals.
    -Against increasing authorized shares – The company is close to needing more shares. That said, the proposal was a 50% increase in authorized shares. The risk of shareholder dilution is significant. The board should introduce another proposal with a much smaller increase.
    -For eliminating “cause” as a reason to remove directors – The proposal is a legal requirement. A recent court case sets a precedent that the language is not allowed.
    -For amending the Employee Stock Purchase Plan – The plan is aligned with shareholder interests, the amendments are minor in nature, and having people within the company focused on value creation is a good governance practice. 
  3. For the shareholder proposal on lowering threshold for special meetings to 10%. Per the Magni position paper, Magni generally votes in favor of these proposals.