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

SBM Offshore NV
Euronext Amsterdam April 8

SBM has been in hot water for a few years due to its involvement in Brazilian bribery allegations. That case is now closed (mostly – the Dutch Authority for the Financial Markets levied a €2 million fine in April 2019), but the company is still struggling to make peace with its shareholders.

The latest bone of contention is the company’s long-term incentive plan. Previously, the plan had allowed for arguably excessive awards that were capped as a percentage of share capital rather than as a percentage of salary. In 2018, the board proposed a different approach that would significantly reduce the quantum opportunity – but remove the at-risk nature of the incentive by switching from performance-based to time-based awards.

Nearly 30% of shareholders opposed the change by voting against the company’s remuneration policy. When that didn’t prompt any response, the proposal to ratify the supervisory board’s actions received almost 35% opposition at the 2019 AGM. This time around, shareholders will get another vote on the remuneration policy, thanks to the incoming SRD II regulations. Ahead of the vote, the company appears to have conducted an engagement program to connect with stakeholders; however no material changes have been proposed to the remuneration policy.

Colliers International Group Inc.
Toronto Stock Exchange  April 7

At its upcoming AGM, Colliers International Group will hold a Say on Pay vote for the first time. In addition to scrutinizing incentive arrangements, shareholders will also have to consider the terms of chair and CEO Jay Hennick’s Management Services Agreement. Unlike other executives, Hennick, who controls 43% of the company’s voting power through his multiple voting shares, does not participate in the standard long-term stock option plan. Instead, he receives a base fee determined in accordance with the Agreement, along with an annual fee equal to 2% of the aggregate of the base fee and an annual bonus payment. Moreover, under the “Long Term Arrangement”, Mr. Hennick would receive a payment estimated at $311 million if the company were to change control or transfer its assets to shareholders.

It’s an unusual situation that may be somewhat familiar to shareholders of FirstService Corporation – another Canadian real estate company under Jay Hennick’s aegis. Up until its 2019 AGM, FSV had a similar dual-class share structure, with Hennick again controlling over 40% of voting power through multiple voting shares, and a similar management services agreement – however, after securing shareholder approval, last year FSV’s board completed a $400 million cash/stock deal that eliminated the multiple voting shares, terminated the management agreement, and reduced Hennick’s voting power to ~15%.

FSV shareholders’ willingness to pay such a high price to simplify the share structure and administration suggests that Colliers model may be out of favor. There’s no FSV-like deal for Colliers shareholders to vote for—but they do have the option of express any opposition to the generous management agreement, or the broader relationship, by voting against that first-ever Say on Pay.

Vallourec
Euronext Paris April 6

There’s plenty of routine business on Vallourec’s AGM agenda, but item #21, a €800 million capital increase, is looming over the other proposals. Structured as a rights issue, the deal has raised concerns from some investors regarding potential dilution, however, the company’s two largest shareholders will both participate (although only one will maintain its current shareholding).

The goal is to significantly deleverage the balance sheet, reduce financial charges by €50 million per annum compared to 2019, and gain additional flexibility to implement the company’s  strategic plan. The capital increase would reduce debt leverage by seven times, bringing adjusted EBITDA to a 3-3.5x range according to calculations made by the S&P. However, stability comes at a price — since the capital increase was announced, Vallourec’s share price has lost more than 50% of its value, and the company suspended its financial forecasts for FY2020.

Vinci
Euronext Paris April 9

France’s Vinci SA is one of the world’s largest concession and construction companies, with globe spanning operations that include everything from transport infrastructure to urban planning. Like a number of its peer in the industry, Vinci’s plans for the climate transition have come under shareholder scrutiny. At this year’s AGM, shareholders representing 2.39% of its share capital have sought the inclusion of two resolutions on the topic. However, Vinci’s board had other plans, rejecting the shareholder proposals on the basis that they would be “interfering in the functions and role of the Board and thus an encroachment of its power”. This is a somewhat unusual move for a French issuer. Shareholder proposals may not get approved very often in France, but they are typically allowed to be presented. It will be interesting to see if shareholders take issue with the board’s decision – and, if so, where they direct their discontent, given that only one director is standing for election.

CCR S.A.
Bovespa – Novo Mercado April 9

CCR has spent the past few years cleaning up its reputation, which had been stained by the company’s involvement in Operation Carwash. With fallout from the scandal largely addressed, the company is now undergoing renewal. Waldo Edwin Pérez was appointed CFO and investor relations manager in early 2020, and a CEO succession process is underway. Board refreshment isn’t limited to the executive management team; this year, a group of minority shareholders have nominated a new independent candidate to serve on the board.

However, shareholders won’t have the opportunity to consider this candidate on her own merits — CCR has recently amended its bylaws to elect directors as a slate, rather than individually. While they won’t get votes on individual directors, shareholders do get to weigh in on the board chair and vice chair, establishment of a supervisory council, and the company’s remuneration policy.

COVID-19 Updates

In light of the dynamic nature of the ongoing crisis, we have compiled a market-by-market roundup of the impact on proxy voting. The most recent updates are below; for the full roundup, see our blog post.

Brazil
On March 30, the Brazilian government approved a provisional measure (MP 931) that will allow public companies to: (i) hold their annual shareholders’ meetings up to seven months after the end of their fiscal year when this is between December 31, 2019 and March 31, 2020, (ii) extend the terms of office of the board directors, executives, members of the supervisory council and committees until the shareholders’ meeting is held (iii) decide by the board of directors ad referendum on urgent matters that generally fall under the scope of the shareholders’ meeting, (iv) declare dividends until the shareholders’ meeting is held.

This provisional measure also establishes a provision stating that shareholders will be able to participate and vote remotely, although the meeting will have to be held, preferably in the building where the company has its registered office.

The Brazilian securities commission will exceptionally be able to extend the deadlines established by the Brazilian Corporate Law 6,404/76.

European Union
The European Central Bank (“ECB”) has recommended banks not to distribute dividends until October in light of COVID. The recommendation is not retroactive for proposals already approved, but “banks that have asked their shareholders to vote on a dividend distribution proposal in their upcoming General Shareholders Meeting will be expected to amend such proposals in line with the updated recommendation.”

France
On March 25, 2020, the French government issued a law 2020-321 on adapting the rules for the meetings of legal persons due to COVID-19. The ruling states that where a large gatherings are limited or prohibited for health reasons, listed companies may decide to hold their meeting without any members being physically present. In this case, members may participate and vote through other available methods.

Without the need to change their bylaws, companies may decide that people that are connected through conference call are deemed present for the calculation of the quorum.

These rules are applicable for AGMs held between March 12, 2020 and July 31, 2020; or, in case of extension, until no later than November 30, 2020.

Also on March 25, the French government issued law 2020-318 on adapting the rules regarding the audit, review, approval and publication of the accounts and other documents for the AGMS, required to be filed or published in the context of the covid-19 epidemic.

Under this law, AGMs may be postponed up to three months after the legal deadline, which is normally six months from the end of the fiscal year for listed companies in France.

Furthermore, the French government will allow a three-month extension for the management board to present the annual accounts to the supervisory board; however, for companies with one-tiered governance structure and with more than 300 employees and a net turnover equal to €18 million, their boards of directors will have only a two-month extension.

In addition, on March 27, 2020, the AMF, the French market regulator drew shareholders’ attention to the exceptional terms of participation at 2020 general meetings. It reiterated that an exclusively remote vote – by proxy or by post – is available in case AGMs will take place behind close doors. In addition, AMF also reminded issuers to livestream their AGMs, if possible, and to give the option to their shareholders to ask questions, either orally or by e-mail. AMF also noted shareholders that some listed companies decided to postpone their AGMs, which was possible thanks to the exceptionally updated regulation.

Germany
On March 27, a law passed pursuant to which companies will be able to hold virtual general meetings, even without a stipulation in a company’s articles of association. In addition, the days until when a company has to call a meeting would be reduced from 30 days to 21 days. Further, interim dividend payments would be facilitated. And, finally, the period until when a company has to hold its annual general meeting would be extended from 8 months after fiscal year end to “until fiscal year end”.

Russia
Adopted March 18, 2020, Federal Law 50 temporarily lifted certain meeting requirements, including specific agenda items (i.e. EOD, election of audit commission, appointment of auditor, approval of accounts and reports etc.) to be held in absentia. The temporary changes apply for FY 2020.

Singapore
The Singapore Exchange Regulation (SGX RegCo) released a new announcement on March 31, whereby companies may hold their AGM before April 30, provided there are opportunities for shareholders to ask questions and that the meeting be shown by a “live” webcast and that the meeting allow for proxy voting. The statement follows a statement from March 25 on the guidance on safe distancing measures. Yet, the March 31 guidance includes an annex whereby gatherings of more than 10 people have been prohibited from March 27, per the Infectious Diseases (Measures to Prevent Spread of COVID-19) Regulations 2020. In light of changes to Ministry of Health Regulations, the Finance Ministry is working to submit new regulations to Singapore’s parliament for its next sitting on April 7, on the holding of meetings. The draft regulations may include virtual meetings and e-voting, if not a strengthened provision for voting via a proxy. With all the changes, SGX RegCo is strongly encouraging companies to release their notices of meeting at least 21 days in advance of a general meeting, while the normal minimum disclosure time is 14 days.

Sweden
The Swedish government has banned all meetings of 50 or more people from March 29. No announcement yet for any regulatory changes regarding filings or virtual meetings.

United Kingdom
On 26 March, the UK’s Financial Conduct Authority (FCA), Financial Reporting Council (FRC) and Prudential Regulation Authority (PRA) released a joint statement confirming that issuers would receive a two-month extension to annual filing requirements, alog with guidance from the FRC for companies preparing financial statements; guidance from the PRA regarding the approach that should be taken by banks and other financial institutions in assessing expected loss provisions under IFRS9; and guidance from the FRC for audit firms seeking to overcome challenges in obtaining audit evidence.