Proxy Paper highlights you can’t afford to miss!
Vocus Group Limited
Australian Securities Exchange – October 24
Vocus Group Limited, one of the largest telco companies in Australia, continues to struggle on various fronts. Following the merger with Amcom and M2 in 2016, efforts to finalise the integration of the acquired businesses have yet to come to fruition. The company reported a A$1.5 billion loss for FY2017 with an impairment to its non-cash goodwill of approximately A$1.5bn, compared with a A$64 million profit in the previous year; as a result of the profit downgrade, Vocus may face a potential class action. The company also had its fair share of personnel changes over the past couple of years. Following the leadership dispute in late 2016, when the founder and CEO James Spenceley and NED Tony Grist resigned due to differences in opinion about the future leadership of the company, the board appointed Geoff Horth as the new CEO. In addition, on October 3, 2017, Vocus announced that executive director Vaughan Bowen has been appointed as its next non-executive chairman, effective immediately. Mr. Bowens’ appointment follows the decision of the current chairman David Spence not to stand for re-election at the 2017 AGM after seven years in the role.
Toshiba Corporation
Tokyo Stock Exchange – October 24
After facing numerous setbacks and scandals in recent years, including accounting irregularities, delayed financial statements, shareholder lawsuits and the disastrous acquisition of U.S.-based nuclear power company Westinghouse, Toshiba is asking shareholders to support an eleventh-hour plan to save the company by selling its flash memory business. If approved, the sale to an investor group led by Bain Capital would provide Toshiba with a significant capital infusion of approximately ¥740 billion, allowing the company to plug a sizable hole in its balance sheet and return to a positive shareholders’ equity position. These steps will need to be completed by March 2018 for Toshiba to avoid being delisted from the Tokyo Stock Exchange pursuant to the listing rules. A potential wrinkle in the plan is Western Digital Corporation, which holds interests in certain joint ventures Toshiba intends to include in the sale and has commenced litigation to block the deal. Westinghouse asserts that the transfer of Toshiba’s interests in these joint ventures without its consent violates the terms of the joint venture agreements. Toshiba maintains that Western Digital’s consent is not required and that Western Digital is seeking to disrupt the sale so that it can pursue an acquisition of the memory business. The two sides are currently engaged in litigation and arbitration.
Crown Resorts Limited
Australian Securities Exchange – October 26
Doing business in China will never be the same for Crown Resorts Limited, a resorts, gaming and entertainment company. In late 2016, a number of the company’s employees were detained by Chinese authorities and subsequently charged with offences relating to the promotion of gambling, which is illegal in mainland China. A total of 19 current and former employees were convicted and fines totalling A$1.67 million were imposed on 16 of the defendants, all paid ex gratia by the company. In addition, the company announced the departure of the CEO Rowen Craigie after 20 years in the role, to be replaced by executive chairman John Alexander. The board agreed to a fixed remuneration of A$3.5 million for Mr. Alexander as a payment for juggling a triple role – executive deputy chairman, CEO and managing director, somehow neglecting the need for incentive remuneration. And lastly, following a break from Crown Resorts between 2015 and August 2017, the board has also welcomed back James Packer as a non-executive director, to represent the interests of Consolidated Media Holdings Limited, the beneficial holder of 48.46% of Crown’s shares.
Western Digital Corporation
NASDAQ – November 2
Does good short-term TSR performance excuse poor pay practices? That’s the question facing Western Digital’s investors. The company posted an impressive 92.7% 1-year TSR and chalked up a number of strategic wins, which may have inspired the compensation committee adjust the calculation formula to increase long-term incentive payouts from 35% to 90% of target. (Those are the regular LTI awards — which for five NEOs were granted on top of additional one-offs. These types of “special” grants are somewhat routine at Western Digital; last year CFO Mark Long received a one-off six-year award worth up to $18 million, more than half of which had been banked within a year of grant. The details and rationale for that award were somewhat murky — similar to the regular LTI program, for which specific performance targets have not been disclosed. Moreover, investors should note that regular LTI grants are only subject to a two-year performance period, which the company argues is appropriate given its rapidly changing industry landscape. It can certainly be difficult to set meaningful long-term targets — but shareholders in it for the long-term may note that last year’s surge only brought 3-year TSR to 1.4%.
Auckland International Airport Limited & Meridian Energy Limited
New Zealand Exchange – October 26 (both)
In a rare flurry of New Zealand shareholder proposal activity, Meridian Energy and Auckland International Airport have both been targeted by nonbinding climate-related shareholder proposals. Two of the proposals, filed by the same proponent, are identical at both companies. The first requests that the companies investigate business opportunities to reduce carbon dioxide emissions. The second directs the companies to lobby the New Zealand government to finance climate initiatives that don’t require debt. Neither proposal is closely related to specific issues at each company; rather, they broadly request that the companies take additional actions to address climate change beyond the status quo. Further, as rationale for these proposals, the proponent, Peter Wakeman, only included links to YouTube videos of an interview with a professor and of a 2009 explanation of how money is created from debt, respectively. Auckland International Airport also received an additional proposal in the wake of a pipeline spill incident near the airport, the rationale for which was cited as a Leaders Debate screened on TVNZ1 at 1pm on 20 September 2017. The spill occurred on Auckland’s only jet fuel pipeline, operated by Refining NZ, resulting in a number of flight cancellations, delays, and reroutes. Although the incident resulted in responses and investigations at both the federal level and throughout the Refining NZ’s supply chain, the proponent requested that Auckland International Airport partake in its own investigation into the feasibility of ways that jet fuel could be unloaded from a ship via pipeline to holding tanks on Auckland Airports’ grounds.