Highlights from the world of Proxy Papers you can’t afford to miss!

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Credit Suisse Group

SIX Swiss Exchange – April 25

After a painful year of restructuring, Credit Suisse is hoping its upcoming AGM will offer some light at the end of the tunnel. Cost-savings targets have been exceeded, and the bank’s capital ratio is up. Moreover, a settlement with the U.S. Department of Justice has removed the albatross of mortgage-backed securities litigation; however insufficient provisions for that payout dragged the company to a second consecutive 2bn+ loss for 2016. The context of structural changes and one-off charges makes evaluating the board’s oversight, management’s performance, and the alignment of their pay with that performance, all the more tricky. With reports of shareholder discontent regarding pay, the company has taken steps to forestall a revolt with executives announcing a voluntary 40% reduction to their incentive awards just last week. It’s a strong gesture, but the last minute timing suggests that the board may need to rethink its shareholder engagement strategies in the future.

Wells Fargo & Company

New York Stock Exchange – April 25

Wells Fargo is facing quite the reckoning. The massive bank has seen its reputation tarnished due to aggressive sales practices in the Community Banking division, and in early April the board released its report into what went wrong. The report, compiled by independent directors and independent counsel, runs to 110 pages and suggests that the board was appropriately responsive to the scandal considering the information that was available to them. Perhaps the most shocking revelation of the report is that the board was not aware of the scope of the employee terminations until Wells Fargo’s settlements with federal agencies, and how the decentralized structure of Wells Fargo and Ms. Tolsted’s control allowed for negative information to be largely contained within the Community Bank.

Sibanye Gold Limited

JSE Limited – April 25

Sibanye turned heads last December when it agreed to acquire U.S.-based Stillwater Mining in an ambitious deal that would cement the company’s transformation from an operator of aging gold mines in South Africa to a premier precious metals company. Stillwater’s Montana platinum/palladium mines are by all means world-class but the deal came as a surprise, the $2.2 billion purchase price is larger than Sibanye’s own market capitalization and the company had just completed a series of acquisitions closer to home. Financing the deal would also stretch the company’s balance sheet past management’s stated comfort level and require shareholders to pitch in additional capital. Fortunately, Sibanye has the support of its two largest investors, South Africa’s Public Investment Corporation and Gold One International Limited, a private consortium with ties to China. The deal faced extended scrutiny from U.S. regulators on national security grounds but was later approved by regulators and is now headed to a shareholder vote.

TCF Financial Corp

New York Stock Exchange – April 26

After a failed say on pay vote in 2015, shareholders came back and approved executive pay in 2016, but low support still lingers. Additionally, the company has been named in a lawsuit by the Consumer Financial Protection Bureau (CFPB) over alleged overdraft protection misdealings by the TCF Bank. CFPB Director Richard Cordray said the company “bulldozed its way through protections against automatic overdraft enrollment and then celebrated its unusual sign-up success” in a January 19, 2017 press release. The recent Wells Fargo scandal comes to mind, and now shareholders will be asked to weigh the Company’s pay and performance against a potentially scandalous backdrop.

Charter Communications

New York Stock Exchange – April 21

Media consolidation + Trump bump + a $100 million payout to the CEO = Charter’s 2017 annual meeting, where shareholders get to weigh in on executive pay for the first time in three years. A shareholder proposal requesting proxy access is also on the ballot, and if it passes, it would put the company’s unusual governance structure to the test. That’s because two large shareholders already have an agreement on board nominees, one of them being media savant John Malone. There’s also rumors of a potential Verizon buyout in the air, so this an early proxy season vote that will be closely watched by a wide swath of investors.

Iluka Resources Limited

Australian Securities Exchange – April 28

Legacy employment contracts always pose a challenge at the time of an executive’s departure, as they often include grandfathered provisions not in line with new legislation or market practice. So was the case of Iluka’s former long serving MD/CEO, David Robb. At the time of his initial contract in 2006, and later under the renewed termination arrangements, the board agreed to pay Mr. Robb the total incentive for performance at target under the STIP and LTIP, pro-rata based on service but regardless of performance, should he be asked to leave. The board had discretion to pay these incentives in the event of Mr. Robb’s retirement. Upon his departure (with the exact timing somewhat a case of smoke and mirrors), Mr. Robb received an STI target award representing 75% of maximum STI, and share rights awarded to Mr. Robb under the 2016 LTIP (three-year tranche), 2015 LTIP and 2014 LTIP vested on a pro-rata basis based on service. Interestingly, all of the Company’s executives received between 35% and 38% of maximum STI opportunity for FY2016, reflecting the Company’s performance for the year, and no awards granted in FY2014 due to vest in FY2016 vested for executives other than Mr. Robb. And of course, performance periods of three years for grants made in FY2015 and FY2016 have not yet been completed. The Company may have a hard time at the AGM trying to explain how these outcomes benefit shareholders in any fashion. Especially because at the 2011 AGM, when the termination benefits were put up for shareholder approval, only 57% of proxy votes were cast in favour, with 42% of proxy votes against, and the proposal was subsequently carried on a show of hands.

BorgWarner Inc.

New York Stock Exchange– April 26

Coming out of its 2016 annual meeting, BorgWarner faced an enveloping wave of shareholder discontent. The first issue was proxy access. Nearly all companies that have adopted proxy access have established a 3% ownership threshold, in-line with virtually all shareholder proposals on the topic as well as the SEC’s original proxy access rules. BorgWarner distinguished itself by implementing proxy access on far stingier terms; it was one of only a handful of companies to have included a 5% ownership threshold for its proxy access right. The result was a shareholder proposal urging the board to loosen the terms of the company’s proxy access right, and it passed with flying colors. More exhausting still, 2016 was the year BorgWarner joined the select group of companies that have failed their say on pays. Chief among the compensation concerns was nearly $10 million in one-time awards granted to the company’s named executive officers with nary an afterthought. With the stingingly poor showing in 2016, the board was forced to spend much of this past year scrambling to implement a slew of changes to both its proxy access right and its compensation program in order to appease disgruntled shareholders. Whether these efforts will pay off in votes remains to be seen.

GAM Holding AG

SIX Swiss Exchange – April 27

As attractive, low-fee returns generated by index funds and similar passive products have triggered a material shift in the investment landscape, active asset managers — including GAM — have faced significant pressure to realign costs and aggressively promote top-performing investment alternatives. While management suggests its efforts in this challenging landscape have been effective, RBR Capital Advisors — a 3% shareholder — asserts GAM has undertaken these steps at a rather plodding pace relative to peers, resulting in a misaligned expense structure, poor investor returns and a dubiously effective executive compensation program. In order to introduce fresh perspectives and stanch GAM’s negative performance, RBR — against the recommendation of the sitting directors — asserts shareholders should support an immediate influx of suitably experienced candidates to the existing board room.

Coca-Cola Company

New York Stock Exchange – April 26

Although he has not yet taken over the position, incoming CEO of Coca-Cola James M. Quincey already has some major fizz in his soda pop: the public support of Warren Buffett, chair and CEO of Berkshire Hathaway Inc. (Coca-Cola’s largest shareholder). Mr. Quincey is set to assume the roles of president and CEO on May 1, 2017, following current chair and CEO Muhtar Kent’s resignation. The task of reviving sales growth will then fall to Mr. Quincey, as the company has struggled in recent years amid increasing concerns among consumers regarding sugary sodas and health problems. Mr. Quincey has already outlined his plan to transition the strategy, beginning with an expansion in its selection of diet beverages. Additionally, for the second year in a row, the company is facing a shareholder proposal from the National Center for Public Policy Research (“NCPPR”), which seeks increased disclosure of Coke’s guidelines for selecting countries and regions for its operations. Given NCPPR’s history of discouraging investments in sustainability and social responsibility, shareholders otherwise inclined to support environmental and social reforms should carefully consider if this proposal is consistent with their interests.

Pfizer Inc

New York Stock Exchange– April 27

The biggest question of 2016 for Pfizer, Inc.’s shareholders was answered on April 16, 2016. On that date, the company announced that its proposed $160 billion mega-merger with Allergan plc had been terminated by mutual consent, which came in the wake of new U.S. Treasury rules deterring corporate tax inversions. After this failed combination, Pfizer turned to a strategy of mergers and acquisitions, completing its $5.2 billion acquisition of Anacor Pharmaceuticals and $14 billion acquisition of Medivation, Inc. in June and September of 2016, respectively. Both acquisitions were seen by some analysts as representing a shift in the company’s business strategy, from lowering taxes through a tax-inversion deal to strengthening the branded drugs portfolio prior to a proposed sale or spin-off of the generics business. However, in late September 2016 Pfizer announced that after evaluating a potential spin-off, the board and management team felt that the company was best positioned in its current structure and would not pursue splitting its name-brand and generic drug businesses. The big question this year is, what will Pfizer do next? What is the best strategy for the company going forwards? Shareholders may very well get answers to those questions at this year’s annual meeting.

Citigroup Inc.

New York Stock Exchange – April 25

At the last annual meeting, Citigroup received approximately 63.6% support for its say-on-pay vote. In response to the say-on-pay vote, the company engaged with its shareholders to seek input on its executive compensation program. Based on the feedback it has received, Citigroup made numerous changes to the executive compensation program, including changing the performance metrics for PSU awards and increasing the percentage of total CEO annual incentive that is awarded as equity-based awards. Shareholders will have to weigh in on the board’s proposed changes to Citigroup’s executive compensation program, and determine whether these changes are worth supporting.


  • Anglo American plc (London Stock Exchange – April 24)
  • Comerica Incorporated (New York Stock Exchange– April 25)
  • Groupe Bruxelles Lambert SA (BEL20 – April 25)
  • Bank of America Corporation (New York Stock Exchange – April 26)
  • Munich Re (Deutsche Börse – April 26)
  • NRG Energy Inc (New York Stock Exchange – April 27)
  • RWE AG (Deutsche Börse – April 27)
  • Schroders plc (London Stock Exchange – April 27)
  • AT&T Inc (New York Stock Exchange – April 28)
  • Bayer AG (Deutsche Börse – April 28)
  • HSBC Holdings plc (London Stock Exchange – April 28)
  • Merck KGaA (Deutsche Börse – April 28)