Important highlights from upcoming meetings, provided by Glass Lewis’ global research team
Unicredit S.p.A.
Borsa Italiana – April 12
At Unicredit S.p.A’s AGM, shareholders will for the first time consider a slate of director nominees proposed by the board itself, rather than by a major shareholder. Historically, in Italy the major shareholder presents a slate of candidates, sometimes opposed by a smaller slate proposed by institutional investors. However, with Unicredit’s ownership increasingly dispersed, the board has responded to calls for a different approach, in line with other markets. The proposed slate has been selected according to detailed qualitative and quantitative guidelines intended to take into account relevant skills and experience.
It’s a sign of changing times and governance practices at the bank, and throughout the Italian market, and it’s not the only one. In the past few years the listed Italian bank Unicredit S.p.A. has been undergoing significant changes to its governance system, showing a high level of commitment with feedback from the market and from analysts. The most recent changes came at a special meeting last December, when the company simplified its equity structure by converting all savings shares into ordinary shares, approved amendments to its articles of association to eliminate the previous 5% limit to voting rights, and increased from one to two the seats on the board reserved for directors elected from the minority slate. Moreover, the board size proposed at the AGM will comprise just 15 directors, down from 23 in 2009. The upcoming election will be a test of the market reaction, taking the pulse of the investors’ trust in the company’s management.
Lennar Corporation
New York Stock Exchange– April 11
Lennar, which recently completed the acquisition of CalAtlantic Group, Inc. to create the largest homebuilder in the U.S., faces scrutiny from GAMCO Asset Management Inc. over the company’s dual share class structure. GAMCO holds nearly 11% Lennar’s Class B superior voting shares and has submitted a shareholder proposal at the 2018 annual meeting requesting that the board provide Class B shareholders with the right to annually convert 1% of the Company’s outstanding Class B shares into Class A shares. Despite their superior voting power, the Class B shares have traded at a discount to the Class A shares in recent periods, likely owing to the limited trading volume of the Class B shares. GAMCO’s proposal appears designed to reduce the valuation gap between the two share classes but would also reduce the number of Class B shares outstanding and available for trading, which the board argues could negatively impact trading and liquidity for remaining Class B shareholders.
SBM Offshore NV
Euronext Amsterdam – April 11
For the first time in the Netherlands, a company is trying to move from a traditional LTI plan based on performance metrics to a Restricted Stock Unit (RSU) plan based solely on time vesting. RSU plans have been popping up in the UK over the past year but are still quite rare on the continent. As RSU plans go, the one proposed by SBM Offshore offers few safeguards. Awards will be set at 175% of base salary for the CEO and he will have to do nothing else but just remain in office for five years for the shares to vest (to be fair, he can’t sell them until after an additional two-year holding period). Furthermore, instead of a financial underpin, the supervisory board retains discretion not to award the restricted shares in case of exceptional market or business circumstances. Whether shareholders have enough trust in the board to approve this move remains to be seen.
Bank of Nova Scotia & Laurentian Bank of Canada
Toronto Stock Exchange – April 10 (both meetings)
In recent years, investor attention regarding the composition of boards of directors has increased. As boards are tasked with more and more challenges, such as cybersecurity and sustainability, boards are under more pressure to evaluate and demonstrate the effectiveness of their composition and director skillsets.
One tool that companies are increasingly using to demonstrate effective board composition is the board skills matrix. In their 2018 management information circulars, both The Bank of Nova Scotia and Laurentian Bank of Canada have disclosed a skills matrix. The Bank of Nova Scotia directors each identified five key areas of expertise, in addition to experience in leadership and strategy, in consultation with the corporate governance committee. The committee then developed the skills matrix included in the circular. Laurentian Bank of Canada also disclosed a matrix, and included the “major fields of expertise” for each of their directors’ biography section.
These matrices seek to impart the aggregate qualifications of the entire board, thereby enabling investors to better understand the board’s evaluation and recruitment process, as well as the skills the board considers critical to its role of overseeing company strategy. As the 2018 proxy season continues, look for more companies to incorporate skills matrices into their disclosures.
OTHER NOTABLE MEETINGS:
- The Goodyear Tire & Rubber Company (NASDAQ – April 9)
- Henkel AG & Co. KGaA, Inc. (Deutsche Börse– April 9)
- Bank of New York Mellon (New York Stock Exchange – April 10)
- Carnival Corporation (New York Stock Exchange – April 11)
- Nestlé S.A. (SIX Swiss Exchange – April 12)
- Puma SE (Deutsche Börse – April 12)
- Prysmian (Borsa Italiana – April 12)
- CNH Industrial (New York Stock Exchange – April 13)
- Ferrari (Borsa Italiana – April 13)
- Fiat Chrysler Automobiles (Borsa Italiana – April 13)
- Vale SA (B3 – April 13)