More highlights from the world of Proxy Papers you can’t afford to miss!
Bio-Rad Laboratories
New York Stock Exchange – April 25
As far as dramatic board shake-ups go, it’s hard to top a quadruple director resignation less than two months ahead of the annual meeting. Such is the case at Bio-Rad, where all four independent directors (Messrs. Drapeau, Malchione, McComb and Ms. Neff), comprising two-thirds of the board, sent a letter to Norman Schwartz, BIO’s chairman and CEO, stating, rather ominously, that they were declining to stand for reelection “due to disagreements with the management of the company regarding executive personnel and corporate governance matters.”
Norman is the son of Alice Schwartz, the company’s controlling shareholder, and together they elect four of the directors to the board (including themselves) voting separately from BIO’s other shareholders via a dual class share structure. BIO has featured rather prominently in the news recently, as it just lost a high-profile whistleblowing trial against its former general counsel, Sanford Wadler. Mr. Wadler was fired in 2013 allegedly for blowing the whistle to BIO’s audit committee about suspected Foreign Corrupt Practices Act violations. The case marks something of a landmark decision with a California federal judge deciding that attorney-client privilege would not preclude Mr. Walder from giving evidence in his whistleblowing case. Mr. Walder won more than $10 million is foregone salary and litigation fees. BIO is considering an appeal.
GEO Group, Inc.
New York Stock Exchange – April 27
It has been a turbulent year for companies operating in the private prison industry. In August, the Department of Justice announced plans to phase out private prison contracts creating significant uncertainty in the industry. As part of its rationale for phasing out the government’s use of these private prisons, the DOJ cited elevated levels of violence, contraband confiscation and human rights violations in privately operated institutions vis-à-vis their publicly operated counterparts. The move had cast a significant regulatory shadow over the company’s operating model and future profitability.
Geo Group shareholders breathed a sigh of relief, however, as President Trump’s new appointments to the DOJ have dismantled these directives. Nonetheless, many shareholders may continue to express concerns regarding the long-term viability of the business model in the face of human rights concerns. However, it appears as if Geo group may be starting to address some of these concerns. Following a 2016 shareholder proposal requesting that the firm take the necessary steps to furnish an independent report into its human rights practices that received just 21% shareholder support, Geo Group affirmed its commitment to human rights and rolled out a comprehensive training program on respect for human rights and provided shareholders with information concerning the training used in this program. Despite these recent steps, the nature of the company’s operations may expose it to significant risks with respect to human rights concerns.
For all these reasons, human rights-related issues are still likely to be at the forefront of discussions at Geo’s upcoming meeting; that is, if Geo was having an in-person meeting. Geo is part of a small but growing contingent of companies that are switching to virtual-only meetings.
Bayer AG
Deutsche Börse – April 26
Bayer’s AGM comes with the multinational still waiting for final approval of its mega-merger with Monsanto. Due to the companies’ scope, and combined market share, the deal requires approval from competition authorities in roughly 30 jurisdictions. Elsewhere, legal trouble relating to the company’s permanent contraceptive device, Essure, contributed to significant charges during 2016 and has expanded beyond the North American market, with lawsuits filed in France and the device reportedly banned in Brazil. With the company yet to respond to these developments, shareholders may ask the board about its preparedness for further litigation at the meeting.
Marathon Petroleum
New York Stock Exchange – April 26
Marathon Petroleum spun off from Marathon Oil in 2011. However, in its six years as a stand-alone company, it has managed to draw the attention of shareholder proponents focused on improving the company’s environmental, social and governance practices and policies. Recently this attention has significantly increased as a result of the Marathon Petroleum’s involvement in the Dakota Access Pipeline (“DAPL”), a controversial pipeline project, the construction of which has raised significant issues concerning the consultation of affected Indigenous Peoples. As a result of its involvement, Marathon has been the subject of divestment campaigns and protests. Now, the company is also the subject of a shareholder proposal aimed at having it produce a due diligence process for addressing environmental and social risks, including Indigenous rights risks. Given the recent attention focused on issues related to DAPL and other pipeline projects, such as the newly-revived Keystone Pipeline, shareholders are likely to take a keen interest in how Marathon Petroleum is handling some of these environmental and social risks.