The annual proxy for this oil company had the following proposals:
- Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote
- Board proposals on incentive plan, issuance of shares from Berkshire Hathaway Warrant, authorizing common shares, lower threshold for written consent, lower ownership threshold for special meetings, and approval of rights amendment
Magni voted as follows:
- For and against proforma proposals.
–For and against directors – The director nominees include three people from the Icahn Group. The Icahn Group is overrepresented on the board. Magni voted against two more junior nominees, Andrew Langham and Margarita Palau-Hernandez.
-For auditors – There appear to be no controversies with the financial statements of the company.
-For “say-on-pay” – The disclosures in the proxy were acceptable, though improvement is required to sustain Magni’s support. The shareholder engagement program was disclosed, though the topic of executive compensation was not listed in the scope of the discussions. The peer group, along with the criteria for the peer group, were disclosed. The market capitalization of the peer group companies was also provided. The company should take the small additional step of showing its market capitalization so that a reader of the proxy can compare it to the peer group.
- For and against board proposals.
–For incentive plan – Stock plans align the interests of the management team with the shareholders.
-Against issuance of shares from Berkshire Hathaway Warrant – This deal relates to a complex financial transaction that was used to finance the acquisition of Anadarko. The disclosure regarding the proposal gets very technical. There is no business purpose-level summary. As such, Magni voted against it.
-Against authorizing common shares – The company is still digesting the recent large acquisition. The board and management need to demonstrate that the deal was a good idea before being given resources to do more deals.
-Against lower threshold for written consent – Per the Magni position paper, Magni routinely votes against these proposals. Lowering the threshold is a bad idea.
-For lowering the threshold for special meetings – Per the Magni position paper, Magni routinely votes in favor of these proposals.
-Against rights amendment – The board seeks to make accumulation of large positions more difficult through an amendment requiring approval. The board instituted a temporary amendment that expires at the annual meeting. Magni usually votes against anti-takeover measures as the measures often hurt shareholders.