Proxy Paper highlights you can’t afford to miss!
Twenty-First Century Fox, Inc.
NASDAQ – November 15
Already in the spotlight for a long-running harassment scandal, its pending acquisition of Sky plc, and board independence concerns, Twenty-First Century Fox is getting some extra shareholder attention as its AGM approaches. For one thing, the agenda features a shareholder-requisitioned proposal asking the company to eliminate its dual-class share structure. For another, shortly after the agenda was released, activist CtW Investment Group launched a “Vote No” campaign against the company’s audit committee in response to the company’s handling of its harassment issues. The group intends to vote against all members of the board’s audit committee unless the company commits to making a series of sweeping governance reforms, including, among other things, the creation of a corporate responsibility and compliance committee and a review of the company’s human capital management. CtW also urges the company to adopt an extensive plan for board refreshment, which include a timeframe for lead director Sir Roderick Eddington’s resignation, the appointment of at least independent two directors with expertise on human capital, corporate responsibility and compliance, and a substantial increase in gender diversity. The October 26 commitment deadline given to the company by CtW has since passed with no public comment by Fox.
Commonwealth Bank of Australia
Australian Securities Exchange – November 16
Commonwealth Bank of Australia is under a cloud due to allegations of “serious and systemic non-compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).” The Australian Transaction Reports and Analysis Centre (“AUSTRAC”) launched civil court proceedings in August 2017, alleging over 53,700 contraventions of the AML/CTF Act, including a failure to comply with the company’s own AML/CTF program, and failures to monitor or report transactions. It’s alleged that in some cases, the company was aware of suspected money laundering or structuring, but still declined to monitor the relevant customers. The violations occurred from 2012 to 2015; with most of the board having been appointed over the past three years, it will be interesting to see who shareholders choose to hold accountable.
Looking beyond legal proceedings, CBA is the latest Australian company to have a shareholder-requisitioned proposal on its ballot. Like at Downer Edi, the proposal would amend the company’s constitution to “ensure the business of the company is managed in a manner consistent with the objective of holding global warming to below two degrees Celsius above preindustrial levels.” This approach reflects Australian practice, whereby shareholder proposals are generally only allowed if they relate to constitutional amendments. It’s getting hotter by the day as the Australian summer approaches; however, shareholders will have to consider whether the amendment is necessary in light of the company’s efforts to date, which include a stated intention to undertake a two-degree scenario analysis by the end of 2018.
Another potential topic of discussion at the meeting is CBA’s strategy. The bank recently divested its Australia and New Zealand life insurance businesses in a A$3.8 billion sale to AIA Group, and concurrently announced a review of its global asset management business, with options including an IPO.
Hain Celestial Group, Inc.
NASDAQ – November 16
Hain Celestial Group, Inc. has undergone significant changes since its last annual meeting was held in November 2015. In the fourth quarter of fiscal year 2016, the company initiated an accounting review and investigation of revenue recognition associated concessions granted to certain U.S distributors. Subsequently, in November 2016 the company announced that revenue associated with the distributors was accounted for in the correct period; however due to the accounting investigation, the company was unable to submit an annual 10-K within the prescribed time frame and was therefore unable to hold a 2016 annual meeting. The company is now involved in several legal proceedings and an SEC investigation related to the accounting review. In addition to accounting practices, Hain’s board of directors has also faced intense scrutiny this year. In September 2017, the company entered into a cooperation agreement with certain affiliates of Engaged Capital, LLC (the “Engaged Group”), approximately three months after the Engaged Group launched a campaign to overhaul Hain’s board. Pursuant to the cooperation agreement, three incumbent directors are not standing for election at this year’s annual meeting and six directors nominated by the Engaged Group have been appointed to the board. Shareholders will have the opportunity to vote on the election of these nominees at the annual meeting.
Oracle Corporation
New York Stock Exchange – November 15
Tech companies aren’t very popular in Washington DC these days, and Oracle is no exception. As it prepares for its AGM, the company is facing Department of Labor lawsuit alleging systematic pay discrimination against female, African American and Asian employees, along with biased hiring practices. The suit comes as a last-ditch attempt by the Office of Federal Contract Compliance Programs, which spent nearly a year trying to resolve the alleged violations before filing, and could lead to Oracle being barred from federal contracts worth hundreds of millions.
Elsewhere on the agenda, executive pay looks to be a hot topic, again. Last year’s say on pay vote garnered just 45% support (particularly ‘impressive’ given that Larry Ellison owns ~28% of the company, and presumably voted in favor), prompting Oracle’s compensation committee to go back to the drawing board. While the committee’s willingness to engage with investors and review the pay structure is commendable, it will be interesting to see how shareholders respond to the changes. While target pay levels have been reduced, they still exceed peers, and incentives are based around front-loaded options with significant retesting, and a lower emphasis on relative performance than previously. Nor are pay concerns limited to the executive ranks. Fees and equity for Oracle’s non-executive directors are significantly above average for the S&P 500 and company peers, with Michael Boskin and Bruce Chizen receiving $908,768 and $659,745, respectively, during fiscal year 2017.
Finally, shareholders should note that the board is slightly less independent than previously; that’s due to Renée James’ appointment as chair and CEO of an Oracle joint venture. Following the appointment, the company reclassified Ms. James as not independent, and she has resigned from the board’s audit and compensation committees.
OTHER NOTABLE MEETINGS:
- Adtalem Global Education (New York Stock Exchange – November 8)
- Coach, Inc. (New York Stock Exchange – November 9)
- Estee Lauder Companies Inc. (New York Stock Exchange – November 14)
- The Clorox Company (New York Stock Exchange – November 15)
- News Corporation (NASDAQ – November 15)
- BHP Billiton Limited (Australian Securities Exchange – November 16)
- ResMed Inc. (New York Stock Exchange – November 16)
- Sysco Corporation (New York Stock Exchange – November 17)