Proxy Blog

PPG Industries, Inc. 

March 18, 2019

A proxy for this supplier of paints, coatings, and specialty materials had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Board proposals to declassify the board and remove supermajority requirements from bylaws 

Magni voted as follows: 

  1. Magni voted for 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. 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” – The shareholder engagement and peer group disclosures indicate good governance practices in executive compensation. 
  2. Magni voted for all board proposals
    -Declassifying the board  Schemes to classify a board insulate it from shareholders and hence are not consistent with strong shareholder relationships.
    -Supermajority – Requirements for supermajorities within governance guidelines tend to exist to protect the status of a powerful minority and hence are not consistent with strong shareholder relationships.  Occasionally, such requirements are helpful in fending off hostile takeover attempts or can be a useful tactic in optimizing valuations when selling the company. Since the board seeks to remove the requirement, the board does not think the benefits associated with the potential occasional need are worth the costs in lower-quality governance. It is easy for Magni to support this proposal.