Highlights from the world of Proxy Papers you can’t afford to miss!
Vale SA
Bovespa – April 20
It’s a contest! Shareholders have taken advantage of recent improvements to nominating rules in Brazil to propose four independent candidates to fill two designated open seats on the board in an unprecedented election. While such contests have previously taken place during rowdier Brazilian AGMs, shareholders voting by proxy have historically not had the opportunity to participate. Given the recent management shake-up, the continuing fallout from the Samarco dam collapse, and the plan to list on the Novo Mercado, shareholders will likely be keen to have the right independent candidates in place. Listen to our recent Proxy Talk in which we interview the nominees and discuss the unique voting procedures.
The AES Corporation
New York Stock Exchange – April 20
2016 was a watershed year for climate change-related shareholder proposals, with many receiving significant shareholder support. One such proposal, at AES, which received over 42% support (excluding abstentions and broker non-votes) in 2016 has been resubmitted at the company’s upcoming annual meeting. Although the regulatory environment concerning climate change has drastically shifted under the Trump Administration, investors have been expressing increased interest in ensuring that companies are taking steps to mitigate their exposure to climate change-related risks. As such, while the stringency of environmental regulations has decreased, shareholder support for climate change-related shareholder proposals could easily increase. The proposal at AES will be the first such proposal to go to a vote and could be a bellwether for how investors will view approach issues related to climate change during the 2017 proxy season.
Wynn Resorts, Limited
NASDAQ – April 21
Wynn Resorts remains in the throes of a five-year legal battle between the company and two former directors—one of whom is CEO Stephen Wynn’s ex-wife Elaine—that is as messy as it is personal. With billions of dollars of equity on the line and no end in sight, the claims continue to be a major distraction to the Wynn Resorts’ management and board. To make matters worse, the company’s executive compensation practices have come under fire in light of the company’s poor performance relative to its peers, with two compensation committee members receiving withhold votes of 37.5% and 28.9% at the Wynn Resorts’ 2016 annual meeting. As Wynn Resorts has a triennial say-on-pay vote, this will be the first time since 2014 that shareholders will have the opportunity to directly weigh in on the company’s compensation practices.
Innoviva Inc.
NASDAQ – April 20
At the annual meeting of Innoviva, Inc., investors will consider a competing minority slate submitted by Sarissa Capital Management, an investment firm helmed by former Carl Icahn lieutenant Alex Denner. The case submitted by Sarissa centers primarily on the problematic relationship between the seemingly simple structure of Innoviva’s business – i.e. straightforward management of a long-established royalty arrangement with GlaxoSmithKline – and the company’s ratcheting expense levels, dubious benchmarking and laggard total shareholder returns. The board counters that management’s involvement in the GSK agreements is both expansive and value creative, and that Innoviva runs a decidedly lean, shareholder-first business with modest compensation agreements. A closer look, however, suggests Innoviva may be leveraging suspect quantitative methodologies, questionable peer sets and opportunistic timing – enabled, in each case, by faulty board-level oversight – to compile a specious case in favor of maintaining the status quo.
International Container Terminal Services, Inc.
Philippine Stock Exchange – April 20
Under Philippines’ laws, there are limits on foreign shareholding and investment on certain sectors of the national economy. To get around legal limits, companies like International Container Terminal Services, Inc. (“ICT”), created classes of preferred shares, which have allowed for additional equity issuances to raise funds on the premise that should the limits on foreign investment change, the preferred shares would be immediately redeemed. There is speculation that President Duterte may change the laws, however ICT isn’t taking a wait and see approach; the company is seeking to change the rules of the game for its preferred Class B Preferred Shares (“B Shares”) to remove the redemption requirement in anticipation of any legal changes. The downside to the amendment is that regardless of changes to the the legal regime, ICT’s chair, Enrique K. Razon would control the Company’s voting share power indefinitely as he is the sole owner of the B Shares, comprising 25.66% of total voting share capital, and directly and indirectly controls 48.23% of common shares, which amounts to 35.85% of total voting capital. For international and domestic minority shareholders who are limited in their ability to acquire common shares and are prohibited from obtaining B Shares, the proposed change would ensure they are effectively locked out from having greater control in the Company, to the benefit of Mr. Razon.
Italmobiliare S.p.A.
Borsa Italiana – April 19
Shareholders assessing executive pay at Italian companies often get stymied by disclosure – there’s too much of it, and yet too little. Italmobiliare S.p.A, for instance, released a 23 page remuneration report (actually relatively short for the market), but neglected to include any explanation of why CEO Carlo Pesenti received a €4 million discretionary bonus for 2016. Does it relate to selling the company’s 45% stake in Italcementi to HeidelbergCement AG? Maybe, maybe not. One person who probably couldn’t tell you is the company’s executive chairman (and the CEO’s father), Giampiero Pesenti; he received nearly a million euros in fees and benefits despite failing to attend a single board or executive committee meeting during the year, so presumably he’s out of the loop. At the upcoming AGM shareholders will weigh in on the company’s remuneration policy, along with a new long-term incentive plan for which the specific performance targets have not been disclosed, and two competing list of director candidates, nominated by 44% owner Compagnia Fiduciaria Nazionale S.p.A. and 1.78% owner RWC Asset Management LLP, respectively.
Sonoco Products Co
New York Stock Exchange– April 19
Shareholders for this $5 billion, South Carolina based industrial and consumer packaging company will once again vote on a board declassification proposal put up by the board. Like many companies, SON’s bylaws require a supermajority vote requirement to pass this type of article amendment. However, unlike so many companies, the 2/3 majority vote requirement does not appear to be a barrier to shareholder support. In 2015, the board received a shareholder proposal for board declassification. Approximately 61% of outstanding shares supported it. In 2016, approximately 60% of outstanding shares supported the board’s proposal even though the board had recommended against the measure. At this year’s meeting, the board recommends that shareholders vote in favor of the proposed amendment.
Fingerprint Cards AB
NASDAQ Stockholm– April 20
In January the Company’s largest shareholder and former CEO Johan Carlström was taken into custody by the Swedish Economic Crime Authority (“SECA”) along with director Lars Söderfjell on suspicion of insider trading, after a substantial number of shares had been sold before a December 2016 profit warning, which sent shares plummeting by 23%. Mr. Söderfjell, who left the board two days later, was subsequently cleared of all charges on February 28, 2017, but the allegations against Mr. Carlström remain. Mr. Carlström has already been charged with seven cases of suspected aggravated insider trading, which allegedly occurred between the period December 2012 and March 2014 when he was the Company’s CEO. The trial for these older charges begins on April 24, 2017, and the prosecutor has called for a five-year ban on Mr. Carlström engaging in any business activity.
OTHER NOTABLE MEETINGS:
- HP Inc. (New York Stock Exchange — April 17)
- Lennar Corporation (New York Stock Exchange– April 18)
- Kraft Heinz Company (NASDAQ – April 19)
- Rogers Communications Inc. (Toronto Stock Exchange – April 19)
- Sherwin-Williams Company (New York Stock Exchange – April 19)
- Beiersdorf (Deutsche Borse – April 20)
- L’Oreal (Euronext Paris – April 20)
- Texas Instruments Incorporated (NASDAQ – April 20)
- Unicredit S.p.A. (Borsa Italiana – April 20)
- Veolia Environment (Euronext Paris – April 20)