Proxy Blog

Salesforce

May 21, 2018

The annual proxy for this sales and support software company had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposals on:
    -Lowering threshold for calling special meetings
    -Eliminating supermajority voting requirements
    -Adding special reporting on high-risk regions 

Magni voted as follows: 

  1. 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.

  2. Magni voted for and against shareholder proposals.
    -For reducing threshold for special meeting – Strong shareholder relationships are part of good governance. Shareholders can be more engaged and feel more respected when the threshold for calling special meetings is low. Management’s primary objection to lowering the threshold is the burden and cost associated with such a meeting. Special meetings called by shareholders are rare, so the objection is not very material.
    -For eliminating supermajority voting requirements  Often supermajority requirements are used to help a minority of shareholders keep control of a company. Good shareholder relationships include engagement with all shareholders.
    -Against special reporting on high-risk regions – An owner of 50 shares wants to impose US standards in every country where Salesforce does business. Good governance is about maintaining high standards and adapting to the local cultures. The board is responsible for getting the balance correct.