Important highlights from upcoming meetings, provided by Glass Lewis’ global research team
CF Industries Holdings, Inc. & Skyworks Solutions, Inc.
New York Stock Exchange – May 10 (CF); NASDAQ – May 9 (SWKS)
Continuing a 2018 proxy season trend, two more companies are relying on SEC guidance to exclude shareholder proposals relating to special meeting rights under questionable circumstances. Similar to what happened at The AES Corporation, shareholders at CF Industries and Skyworks each sought to set the ownership threshold for calling a special meeting at 10% of share capital. For CF, that represents a reduction from the current 25% threshold — a level that was approved by shareholders under a binding vote in 2014. By contrast Skyworks’ shareholders did not have any special meeting rights when the shareholder proposal was submitted back in December; however the board subsequently implemented a 25% threshold in January 2018.
In each case, the companies added ‘competing’ proposals to the agenda, which ask shareholders to ratify the existing 25% threshold. They then successfully petitioned the SEC to exclude the shareholder-requisitioned proposals, on the basis that a shareholder could not logically vote for both. It’s a questionable bit of reasoning, and the Council of Institutional Investors has already asked the SEC to reconsider its approach. However any reinterpretation won’t come in time to give CF or Skyworks shareholders the opportunity to consider a lower limit at their AGMs.
LafargeHolcim Limited
SIX Swiss Exchange – May 8
Last year, LafargeHolcim’s AGM took place in the wake of an internal investigation into the company’s affairs in Syria. Since then the air hasn’t exactly cleared — in December it was reported that Lafarge’s former head of security and two former directors of its Syrian subsidiary are under formal investigation by French authorities — however that’s not for lack of movement on the part of the board. Aside from the internal investigation itself, a new Ethics, Integrity and Risk committee was formed, along with enhanced policies relating to risk assessment, restricted party screening, and sanctions and export control. There’s also been turnover: former CEO Eric Olsen fell on his sword, replaced in October by Jan Jenisch, formerly of Sika. Meanwhile the board itself remains an area of potential shareholder concern. While all of the ten directors are considered independent by the company, five have ties to significant shareholders or have served for over twelve years.
Alexion Pharmaceuticals, Inc.
NASDAQ – May 8
There’s nothing like a scandal to encourage board refreshment — except maybe a scandal, plus pressure from activist shareholders. Alexion was already dealing with scrutiny surrounding its sales practices, which prompted a major shakeup of executive management, including new CEO, CFO, CCO and R&D appointments during 2017; then in December, reports emerged that Elliott Management had built up a stake and was pushing for change. The board chose to collaborate with the activist, ultimately settling on the appointment of Millennium Pharmaceuticals’ former president Deborah Dunshire as a non-executive director; former executive VP and general counsel of Johnson Controls, Judith Reinsdorf, was co-opted shortly thereafter. By the time the dust had settled, the board stood at ten members, including five who have joined since 2016. It looks like the company can count on support from Elliott, but it will be interesting to see how other shareholders react to the all-new, all-different board.
Leonardo S.p.A.
Borsa Italiana – May 10
In considering Leonardo’s advisory vote on its remuneration policy, shareholders will have to take into account a €9,442,000 severance payment made to former CEO Mauro Moretti. Italian companies often have severance policies that exceed best European market practice, however a payment amounting to approximately 930% of Mr. Moretti’s 2016 annualised fixed remuneration, calculated with little explanation, may nonetheless deviate from shareholder expectations. The state-owned tech and defense conglomerate is also proposing a new severance agreement with its current CEO Alessandro Profumo, which would pay an amount equal to the total received until the natural end of his office in 2020. Given the high level of discontent expressed on the say-on pay proposal last year, when 56.6% of non-state shareholders voted against, securing support for the proposed remuneration policy may be a challenge.
Dominion Energy, Inc.
New York Stock Exchange – May 9
Dominion Energy’s annual meeting hasn’t happened yet, but environmentally-minded shareholders have already won a victory. On April 2, 2018, the New York State Comptroller issued a press release announcing that the Company has agreed to detail how they will be impacted by the global effort to achieve the Paris Agreement’s goals and how they can adapt to a lower carbon future. As a result, the New York State Common Retirement Fund has withdrawn their shareholder proposal requesting increased reporting on climate change from this year’s annual meeting ballot. This comes a year after a shareholder proposal seeking an assessment of the long term impacts on the company’s portfolio of public policies received near-majority support. With the NY State bill off the agenda, all eyes are on the South Carolina Senate, which in February introduced a bill that would have a significant impact on the financial implications of Dominion’s pending merger with SCANA Corporation.
Clarkson plc
London Stock Exchange – May 10
Last year, over a quarter of Clarkson plc’s shareholders voted against the company’s remuneration report and binding pay policies after CEO Andi Case received a bonus of just under £3m. The payment was the result of an uncapped profit sharing system; while that structure is unusual for a UK plc, the company maintains that it’s standard market practice for private shipbuilding competitors, and a necessity for retaining the current management team. With that in mind, the board made some concessions in response to the shareholder vote, but insulated the existing team: the changes (which include a bonus cap and increased deferral) would only apply to new hires. Whether that’s enough to mitigate shareholder concerns remains to be seen — and the fact that Mr. Case’s 2017 bonus edged up above £3 million might complicate matters.
OTHER NOTABLE MEETINGS:
- American Express Company (New York Stock Exchange – May 7)
- 3M Company (New York Stock Exchange – May 8)
- Solvay SA (Euronext Brussels– May 8)
- ArcelorMittal (Bourse de Luxembourg – May 9)
- Cathay Pacific (Hong Kong Exchange – May 9)
- Gilead Sciences, Inc. (New York Stock Exchange – May 9)
- Philip Morris International (New York Stock Exchange – May 9)
- Under Armour, Inc. (New York Stock Exchange – May 9)
- AMP Limited (Australian Securities Exchange – May 10)
- Direct Line plc (London Stock Exchange – May 10)
- Eni S.p.A. (Borsa Italiana – May 10)
- Ford Motor Company (New York Stock Exchange – May 10)
- Melrose plc (London Stock Exchange – May 10)
- Agricultural Bank of China (Hong Kong Exchange– May 11)