Proxy Blog

Vertex

May 8, 2018

The annual proxy for this pharmaceutical company had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposals on:
    -Drug pricing risk
    -Lobbying disclosure 

Magni voted as follows: 

  1. Magni voted for and against the 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 materials were opaque on benchmarking with no documented peer group. The proxy document was published in a format that made electronic search difficult. Even if the benchmarking data was published in some way, Vertex’s removal of search capability (unlike almost every other proxy statement from a company in the S&P 500) is a form of opaqueness and hence inconsistent with good governance.

  2. Magni voted for and against shareholder proposals.
    -Against requiring a report on pricing – The material provided by the shareholder came across as a political platform instead of one in the interest of shareholders. The rapid escalation of drug prices is a significant issue yet having one company produce a report is unlikely to impact the issue and could harm the company.
    -For lobbying disclosure – Disclosure of lobbying activities and expenditures is part of good governance. A company should be transparent. Vertex is opaque about lobbying.