Important highlights from upcoming meetings, provided by Glass Lewis’ global research team
Tesla, Inc.
NASDAQ – March 21
Tesla’s special meeting will have only one item on its agenda – a referendum on the grant of over 20 million stock options to Elon Musk, who besides CEO is one of the company’s founders and its largest shareholder. The company has taken the unusual step of requesting approval for this grant, a rarity in the US market and one made moreso by the abstentions of both Elon and his brother Kimbal from the vote.
Beyond the enormous disclosed value of the stock options, the grant is notable for its structure. There is no “service-based vesting” for simply showing up to work. Receiving awards requires multiples of growth in market capitalization, revenue, and EBITDA, and each component includes tailored mechanisms for adjusting out transactions to all but require organic growth. Adding to the list of unusual features, earned shares from exercised options must be held for years before being sold.
The unique features well suit a company that positions itself as doing everything in a new, better way, but whether shareholders will be able to stomach the largest single grant in the age of say-on-pay voting remains an open question.
Safestore Holdings plc
London Stock Exchange – March 21
After withdrawing remuneration proposals in the lead up to its 2017 AGM due to an expected lack of support, Safestore reconvened for an EGM, and just barely snuck through: its remuneration policy received a 44.2% against vote (10% abstained) and its long-term incentive plan received a 43.9% against vote (10% abstained). Despite the obvious shareholder discontent, following a number of years of intense scrutiny of executive pay, Safestore’s remuneration committee went ahead with plans to grant 2,000,000 shares to the CEO, with a face value on grant date of a little over £8.5 million. At this year’s AGM the remuneration report will again come under scrutiny, and it will be interesting to see if any of last year’s abstentions get fed up with being ignored and flip over into against votes.
Clariant AG
SIX Swiss Exchange – March 19
Clariant shareholders are likely to have plenty of questions on the company’s strategic direction at its 2018 AGM. After its planned merger with Huntsman Corp. collapsed under pressure from an activist, Clariant reaffirmed its pre-merger strategy with some added measures intended to boost growth and value creation. Only a matter of months after building up its shareholding and scuppering the merger, activist White Tale sold its blocking minority shareholding to a white knight — SABIC — a Saudi Arabian industry peer and joint venture partner. While Clariant and SABIC disclose that they are in intensive discussions regarding a growth strategy, expect this AGM to be dominated by requests for information on specifics of the future working relationship and assurance that this knight does indeed have noble intentions.
Transdigm Group Incorporated
New York Stock Exchange – March 18
With shareholders and institutional investors showing increased interest in board gender diversity during the past year, Transdigm may find themselves a target of heavy criticism. As it stands, Transdigm appears to be the only company in the S&P 500 that does not have any women appointed to their board. In the company’s nominating and corporate governance committee charter, Transdigm highlights a commitment and responsibility to seek out “highly qualified women and individuals from minority groups to include in the pool from which board nominees are chosen.” Indeed, Transdigm’s management interviewed two men and two women director nominees in the past year—before ultimately welcoming the two men onto the board in October 2017.
The board’s lack of gender diversity has been a key point of concern for as much as 40% of Transdigm’s shareholders this past year, of which “the board has taken note.” However, large institutional investors and advisors have taken concrete steps in showing a desire for active progress on the subject, and the New York City Comptroller is seeking increased accountability through the Boardroom Accountability Project 2.0. Although Transdigm has made some positive corporate governance changes in the past year, including adoption of proxy access and recent board refreshment, the company may face increased questions from shareholders on why “taking note” of the board’s gender diversity has not translated into “taking action” with their most recent appointments, and if there are any definitive plans to do so in the future.
SGS SA
SIX Swiss Exchange – March 19
Minority shareholders don’t have much to complain about in regard to SGS’s business development in recent years; however, their contentment with the company’s impressive financial results and increased dividend may be tempered by the feeling that some governance concerns are falling on deaf ears. At SGS’s 2017 annual meeting, a number of its board of directors — which is dominated by representatives and individuals with significant external commitments — would have failed to be reelected if major shareholder votes had been excluded. Generally, this would serve as a wake-up call for the board to make changes or provide further justification for the status quo, but there is little evidence of either in the company’s recent public filings.
Habib Bank Limited
Pakistan Stock Exchange – March 19
Shareholders have an opportunity to vote against basically every member of the board after a significant lapse in governance and oversight forced the company to cease operations in the U.S. and pay a US$225 million fine. Habib fell under the investigatory spotlight of New York State’s Department of Financial Services over lax practices in monitoring international transactions, with some involving a bank with suspected links to Al Qaeda, international arms dealers and suspected terrorists. While the concerning practices, for which the Company was penalized 53 times, date back to 2007, apparently no one on the board either knew of regulatory concerns or cared to do nothing about it. Either way, as Pakistan’s largest bank, being the first foreign bank to be forced to cease operations in the U.S. is a dubious honor – and one that may raise questions about the board’s oversight.
OTHER NOTABLE MEETINGS:
- Cooper Companies (New York Stock Exchange – March 19)
- Agilent Technologies (New York Stock Exchange – March 21)
- Starbucks Corporation (NASDAQ – March 21)
- Banco Santander (Bolsas y Mercados Espanoles – March 22)
- Novo Nordisk A/S (NASDAQ Copenhagen – March 22)
- Swedbank AB (NASDAQ Stockholm – March 22)