Proxy Blog

The AES Corporation

March 30, 2020

The annual proxy for this electrical power company had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposal on requiring shareholder approval on changes 

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 disclosed a shareholder engagement program, though the level of activity and scope of discussions were not disclosed. There was no discussion of a peer group. 
  2. For shareholder proposal on requiring shareholder approval on changes. This proposal is unique. The shareholder statement in support of the proposal was not compelling, though the proposal did specify that non-binding votes were sufficient. The board recommendation against the proposal did make some good points about existing shareholder rights and the need to give the board latitude to act quickly. That said, the board response highlighted the existing shareholder engagement program as one of the reasons that the proposal was not needed. As documented above, the disclosures related to the shareholder engagement program are incomplete. Further, the response did not address the proposal being about non-binding votes. When looking at the whole of the board response, the response does not address the proposal. As such, Magni voted in favor of the proposal.