Proxy Blog

The Clorox Company 

October 23, 2018

The 2018 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. 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” 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 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 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.