Proxy Blog

The Charles Schwab Corporation

April 10, 2019

The annual proxy for this financial services company had the following proposals: 

  1. Proforma votes on directors, the appointment of auditors, and executive compensation 
  2. Votes on shareholder proposal requesting annual disclosure of EEO-1 data 

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. The compensation levels are set using a benchmarking process.
    -For auditors  There appear to be no controversies with the financial statements of the company.
    -Against “Say-on-pay” Advisory Vote – The proxy contains no information about shareholder engagement, much less shareholder engagement about compensation. The company uses a peer group that combines companies from four different categories. The approach makes sense, but the description of the process to create the peer group is minimal. A lack of engaging with shareholders and a somewhat opaque process for creating a peer group are inconsistent with strong shareholder relationships. 
  2. For shareholder proposal on requesting annual disclosure of EEO-1 data. Magni has previously voted for and against these proposals. The topic of diversity is important. If the shareholder request is generic (i.e., not specific to the company, but rather a proposal to be used with many companies), then the company has latitude to explain its approach to diversity. If the company has a good approach to diversity and provides good diversity statistics, then Magni will usually vote against the proposal. This proposal highlights the company’s lack of diversity disclosure, so the proposal is not generic. The company proclaims to consider diversity important and to have a strong program, yet the company does not explain the lack of disclosure and mainly finds fault with the EEO-1 data. Yes, such data has limitations. The company could develop a disclosure that provides more meaningful data. Until then, Magni will vote for disclosure of EEO-1 data.