Important highlights from upcoming meetings, provided by Glass Lewis’ global research team

Panalpina WeltTransport (Holding) AG
SIX Swiss Exchange – April 5

Panalpina’s 46% shareholder, who has dominated proceedings since IPO due to a 5% voting rights restriction that applies to all other shareholders but itself, has convened an EGM to remove all restrictions, thus implementing a “”one share, one vote”” structure. As with most things in life— if it sounds too good to be true, it probably is. While the board is selling the shareholder proposal as a governance improvement, the legal applicability of the major shareholder’s exemption from the voting rights restriction has been called into question and the board has faced substantial criticism from other significant shareholders for (amongst other things) its reactiveness and lack of transparency, many years of substantial underperformance compared to peers, and its purported coziness with the major shareholder. These concerns have been further underlined by the board’s failure to provide a meaningful response to a takeover offer received in January, which led to a 28% jump in share price.


Free-float shareholders are between a rock and a hard place; those already questioning board and company performance will have to decide whether the benefits of introducing a progressive corporate governance structure outweigh the downside of effectively cementing the power of the major shareholder at what appears to be quite a critical moment. But a rejection of the proposal also comes with inherent risks; should the major shareholder’s voting power be reduced to 5%, this could lead to a series of contested general meetings as all substantial shareholders suddenly gain a disproportionate amount of voting power in relation to their capital stake.

The outcome of this proposal appears to be highly dependent on the decision of an independent ad hoc board committee, which is currently considering the legal applicability of the major shareholder’s exemption from the voting rights restriction and whether its voting rights should also be restricted for this EGM.

Lennar Corporation
New York Stock Exchange – April 10

It’s been nearly a year since Lennar announced its partnership with Amazon, yet it’s still unclear whether the company’s fully-wired “smart homes” will allow investors to cast AGM votes through their microwave ovens. The homebuilder’s futuristic push hasn’t yielded a virtual-only meeting format, but the company does have one thing in common with many tech giants: a dual-class voting structure, which gives executive chair Stuart Miller 33.2% of the company’s voting power and economically disproportionate influence over any matters that require shareholder approval. It’s clear that independent investors are frustrated with the structure: at last year’s annual meeting, a shareholder proposal calling for an equitable distribution of votes received 36% support. While the distribution of preferential voting stock complicates a precise breakdown, it appears it would have received majority approval if not for Mr. Miller’s outsized voting influence. That’s not the only thing shareholders are concerned about; last year’s say-on-pay received 23% opposition, and a subsequent investor outreach program does not appear to have yielded significant changes. One area where changes did occur was in executive leadership, with Rick Beckwitt replacing Miller as CEO, along with several other management appointments.

Nissan Motor Co Ltd
Tokyo Stock Exchange – April 8

Following the arrest of two representative directors of Nissan Motors (Mr. Carlos Ghosn and Mr. Greg Kelly) on allegations of underreporting compensation in yearly securities reports, the company’s board is scrambling to restore trust in its management structure. Amongst the whirlwind of allegations and arrests, Nissan Motors, Renault and Mitsubishi Motors have taken steps to reaffirm their strategic alliance, which has been active since 1999 and led to the revival of a once struggling Nissan.

Nissan Motors is seeking to discharge Mr. Ghosn and Mr. Kelly from its board at a special meeting in April. This follows the dismissal of Mr. Ghosn and Mr. Kelly from their executive positions at the time of arrest. In addition, in a move to further highlight their commitment to the alliance with Renault, Nissan Motors is also appointing Mr. Jean-Dominique Senard, who succeeded Mr. Ghosn as chair of Renault. It will be interesting to keep an eye on shareholder sentiment towards the proposed changes to the board and Nissan Motors’ response to these events and the other numerous scandals that they have faced in the past few years.

Banco Santander
Bolsas y Mercados Españoles – April 11

As one of Europe’s largest financial institutions, Banco Santander will address a whole host of matters at its upcoming AGM. However there’s one question that looks certain to dominate the proceedings: how on earth did the board botch the company’s CEO succession so badly? It’s not just that the appointment of Andrea Orcel was on the books for over four months before ultimately cancelled, it’s the reason for the cancellation. After brushing away reports that Orcel might bring an abrasive management style, the board changed its mind due to concerns regarding the cost of the appointment, which reportedly exceeded €50 million due to the commitment to replace forfeited deferred compensation from UBS.  Mr. Orcel is now contemplating a lawsuit, and shareholders are left to wonder what went wrong. Perhaps the most interesting question is whether the remuneration or nomination committee will take more heat for the debacle – though with Bruce Carnegie-Brown serving as the chair of both committees, it may not matter.

Broadcom Inc.
Nasdaq — April 1

Broadcom’s pursuit of rival Qualcomm was one of the biggest stories of proxy season 2018, spilling outside the business section to generate front page headlines after the U.S. government started raising questions, with the executive branch ultimately issuing an unprecedented order to terminate the deal. After all of that drama, Broadcom’s November 2018 acquisition of CA Technologies was a much smoother affair. That was, in part, by design – the board’s longest-serving director, Kenneth Hao, even took the step of resigning from the board in July 2018 to proactively avoid any potential conflicts of interest that could arise in the deal due to his other commitments. That wasn’t the only board change – three independent directors, including former board chair James Diller, will retire at the AGM. Diller was replaced as chair by former chief technical officer Dr. Henry Samueli in December 2018, with Eddy Hartenstein serving as lead independent director. Mr. Hartenstein also serves as chair of the compensation committee, and may face tough questions from shareholders after nearly 40% opposed last year’s say-on-pay vote. That result prompted an engagement outreach program, which in turn has yielded improvements to disclosure and a commitment not to grant the CEO any more equity awards until at least 2021. However the committee appears to have faith in its general approach, stating that it will leave the structure of the pay program in place. Whether shareholders agree remains to be seen.

Nestlé S.A.
SIX Swiss Exchange – April 11

Full-year results that meet or exceed analyst estimates are always welcome; in the case of Nestlé, they may allow the company to avoid a crunch. It’s been nearly two years since Daniel Loeb’s hedge fund, Third Point LLC, built up a stake in the Swiss food and beverage multinational – and started pushing for change. Many of the points initially raised by Third Point were addressed toward the start of CEO Mark Schneider’s tenure, with the company announcing an operating profit margin target, disclosing plans for a share repurchase programme, divesting of its US confectionery business, and providing further information to the market about its stake in L’Oréal. Third Point followed up in July 2018 with an open letter that questioned the company’s strategy and culture. Pointed critiques of the organization and even board leadership prompted speculation that Third Point might contemplate seeking support for other institutional investors for broader changes. However the full-year results appear to have changed the tenor of the conversation. In a recent investor letter, the hedge fun stated that it was encouraged by the progress that Nestlé had made against its targets, highlighted its belief that the company could sustain its momentum beyond 2020, and underlined its confidence in the current leadership.

International Container Terminal Services, Inc.
Philippine Stock Exchange – April 11

At the 2018 AGM, International Container Terminal Services, Inc (“ICT”) faced a shareholder revolt stemming from a movement by organized labor to try to change the board due to concerns over “governance and operational issues.” Some large institutional investors voted against key directors over board independence concerns, particularly in relation to tenure. Since 2018, not much has changed; the only “refreshment” came after one director regrettably passed away – and was replaced by an 89-year old director who serves on a total of seven public company boards. Given the circumstances, one may question just how committed ITC is to maintaining a board with effective independent oversight. Moreover, the appointment of an 89-year old male director to an already 100% male board may suggest that gender diversity might not have been considered a priority. The recent changes raise the question of whether shareholders will stand for change they might not believe in.