Important highlights from upcoming meetings, provided by Glass Lewis’ global research team
Hyundai Mobis Co., Ltd.
Korea Exchange – May 29
The upcoming special meeting of shareholders of Hyundai Mobis Co. Ltd. sets up another showdown between one of South Korea’s largest family-controlled conglomerates and U.S.-based activist investor Elliott Management Corp. Two years removed from its campaign against Samsung Group, Elliott now seeks to block a merger between two affiliated entities of the Hyundai Motor Group.
Hyundai’s controlling family and management argue that a proposed spin-off of Hyundai Mobis’ domestic manufacturing and after-sales parts businesses, and a subsequent merger of those segments with logistics-focused Hyundai Glovis Co. Ltd., will help streamline the automotive group’s complex structure in response to pressure from the government and investors to reform Korea’s family-run conglomerates. The restructuring is widely considered to be a key step in the Chung family’s succession plan from the group’s 80-year-old chairman to his son, currently the vice chairman. The group also states the restructuring will best position both Mobis and Glovis for the rapidly evolving and technology-focused future automotive market.
In challenging the proposed deal, Elliott claims that the spin-off of Hyundai Mobis’ most profitable business lacks business logic and does nothing by itself to address the troubling circular ownership structure of the group. Moreover, due at least in part to Korea’s rigid legal framework for assessing business valuations and calculating merger terms, Elliott and other shareholders of Mobis have complained that the deal terms severely shortchange them. Compounding these concerns, the controlling family has a much larger ownership stake in Glovis than it does in Mobis, and the family intends to execute a series of subsequent share swaps between those and other affiliated entities shortly after the restructuring, on largely unknown terms, in order to consolidate its ownership in what would become the de facto holding company of the Hyundai group.
Walmart Inc.
New York Stock Exchange – May 30
“Get 33% more for 25% less” sounds like the kind of bulk deal you might find at Wal-Mart — just be sure to read the fine print. In this case, 25% is the proportion by which annual cash incentive opportunities for Wal-Mart executives would be reduced in 2018, as reiterated throughout the company’s 2017 and 2018 disclosures. The 33%, on the other hand, is the proportion by which CEO C. Douglas McMillon’s target annual bonus actually rose year-on-year (target payouts for other executives were up at least 35%). Besides reconciling the promised theoretical reductions with apparent actual increases, shareholders will also consider a change to the LTIP performance period that effectively makes the award into a second short-term performance assessment with additional vesting requirements attached. The retailer’s agenda also includes two shareholder proposals, one calling for an independent board chair, and the other asking the company to report on racial and ethnic pay equity.
Fingerprint Cards AB
NASDAQ Stockholm – May 29
Fingerprint Cards has quite the mess on their hands. Some shareholders may object to the appointment of Johan Carlström as chairman, on the basis that he was formerly the company’s CEO. On the other hand, some shareholders may object to Mr. Carlström’s appointment on the basis that he has been charged with seven cases of suspected aggravated insider trading and now faces a potential five-year ban from any business activity. One group that doesn’t object is the company’s nomination committee — of which Carlström, who is also the company’s largest shareholder, already serves as chair. However the rest of the board disagrees: half of the company’s directors have declined reelection, and even the independent auditor isn’t interested in sticking around. And with all those departures, the company is now the only OMX Stockholm 30 constituent without any women on the board.
Facebook, Inc.
NASDAQ – May 31
Thanks to its share structure, social networking giant Facebook remains firmly under founder Mark Zuckerberg’s control — but that hasn’t stifled shareholders agitating for change at its annual meetings: shareholder proposals to eliminate unequal voting rights at the company, for example, routinely get significant unaffiliated shareholder support. In 2018, however, Facebook and Zuckerberg are coming under particular scrutiny as they battle to appease both shareholders and regulators following data breaches in the Cambridge Analytica scandal. Privacy has long been a topic of concern at the company and recent events would appear to show that it has yet to obtain a firm grasp over how to manage the content disseminated on its namesake platform and protect user information. Concerns were heightened when WhatsApp founder Jan Koum (a known privacy advocate) abruptly left the board in the weeks leading up to the annual meeting, leaving a substantial sum in forfeited stock awards behind in the process. Shareholder resolutions to bolster board level risk oversight and requesting enhanced reporting on content enforcement policies may pique shareholders’ interests this year, but for the time being only one shareholder’s opinion matters.
Publicis Groupe SA
Euronext Paris – May 30
The pay arrangements for Publicis’s former CEO Maurice Lévy were always unusual: Since January 1, 2012, Levy’s remuneration in his capacity as company CEO consisted solely of variable remuneration linked to the achievement of Group financial performance criteria and individual criteria non-financial targets. That changed last year. With Levy due to transition from CEO to chairman, the board proposed a new arrangement: 2.8 million per year in respect of the chairman’s role (also compensating him for forgoing a non-compete indemnity), plus an additional 2017 bonus in respect of his final months as CEO. Rather than calculate the bonus, the board just took last year’s award and pro-rated it. Notably, last year’s award amounted to 2.5 million despite the company posting a loss — apparently non-financial performance was key, though disclosure was minimal. Given that 41% of shareholders objected to his remuneration last year, it’s interesting that no changes were made to the implementation of policy for 2017, or going forward — and it will be interesting to see how shareholders react to the board’s non-responsiveness.
Van Lanschot Kempen NV
Euronext Amsterdam – May 31
Coming on the heels of contentious votes at SBMO Offshore, ING and Unilever, small bank/wealth manager van Lanschot Kempen NV offers another controversial Dutch remuneration proposal. The bank, like all financial institutions in the Netherlands, is subject to regulatory requirements that prohibit them from awarding more than 20% of base salary in variable compensation. However, the bank used this as an excuse in 2015 to replace all variable remuneration with a yearly fixed-value equity award that is not at risk. This year, the bank proposes to increase the CEO’s remuneration by approximately a quarter, once again with none of it at risk. Shareholders may have questions about the benchmarking process that led to the raise, as nine of the 17 entities referenced are big blue-chip companies, such as ING, ABN AMRO, the global chip maker ASML and nutritional products producer DSM; by contrast, for all its will to attract motivate and retain exceptional talent, van Lanschot is listed on the Amsterdam small cap index.
OTHER NOTABLE MEETINGS:
- ASM International NV (Euronext Amsterdam – May 28)
- ABN AMRO Group NV (Euronext Amsterdam – May 29)
- Nordstrom, Inc. (New York Stock Exchange – May 29)
- Amazon.com, Inc. (NASDAQ – May 30)
- Caesars Entertainment Corp. (NASDAQ – May 30)
- Chevron Corporation (New York Stock Exchange – May 30)
- eBay Inc. (NASDAQ – May 30)
- Exxon Mobil Corporation (New York Stock Exchange – May 30)
- Indofood Sukses Makmur Tbk PT (Indonesia Stock Exchange – May 31)
- Total SA (Euronext Paris – June 1)