Proxy Blog

The Clorox Company 

October 24, 2019

The annual proxy for this consumer and professional products company had the following proposals: 

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

Magni voted as follows: 

  1. 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” – The board has a shareholder engagement program and the program elements are disclosed, though the level of activity is not disclosedThe peer group and the criteria for the peer group are disclosed, along with comparisons showing the position of the company relative to the group. Going forward, the company needs to disclose the activity level on the shareholder engagement program to sustain Magni’s vote for this proposal. 
  2. For board proposal to remove supermajority requirements from bylaws. A strong relationship with shareholders is part of good governance. Supermajority voting requirements in bylaws are usually an impediment to 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 it seeks to remove the requirement, the board does not think the benefits associated with the potential occasional need are worth the costs in lowerquality governance. It is easy for Magni to support this proposal.