Proxy Paper highlights you can’t afford to miss!
Automatic Data Processing Inc.
NASDAQ – November 7
In less than two weeks, shareholders of Automatic Data Processing will decide whether the payroll and human resources outsourcing company should pursue a more ambitious strategy under the oversight of a refreshed board of directors. In one of the higher-profile proxy fights of the year, activist investor Pershing Square has nominated three candidates for the ADP board, including the hedge fund’s founder Bill Ackman. The dissident nominees have proposed a transformation plan they say will accelerate ADP’s growth and improve profitability. Still, the contested campaign comes as somewhat of a surprise because it targets a company that has had a leading position in several markets and has historically outperformed the S&P 500 Index.
Still, Pershing Square argues that ADP is more recently underperforming its closest peers and its potential, both operationally and financially, losing market share to more innovative and efficient competitors, and not fully leveraging its scale and resource advantages. Thus, Pershing Square sees a substantial opportunity for ADP to improve its performance and generate superior returns for investors. Meanwhile, the current board and management seek to assure shareholders that the company is already addressing these issues, and that it has the right team and plan in place for ADP to continue its track record of delivering consistent operational improvements and shareholder returns going forward.
Domino’s Pizza Enterprises Limited
Australian Securities Exchange – November 8
Shareholders at Domino’s Pizza Enterprises Limited will have to wait until after the company’s AGM to hear the result of an independent review into the company’s compliance processes, which is expected to conclude by the end of November. Deloitte was engaged by the company to conduct the review after media reports prompted the Fair Work Ombudsman to launch an investigation into alleged employee underpayment and forced overtime by franchisees. In addition, one franchisee allegedly asked for money in exchange for visa sponsorship. The resulting negative PR led managing director & CEO Don Meij to forego his bonus for the year; however the company’s pay votes may still prove contentious, as shareholders will consider an incentive structure based largely around a single, adjusted measure of performance, along with discretionary KMP bonuses for which the basis has not been clearly disclosed. Elsewhere on the ballot, Grant Bourke and chairman Jack Cowin are standing for election; shareholders should note that while the board considers Mr. Bourke independent, he was a former executive of the company until 2007.
Seven West Media Limited
Australian Securities Exchange – November 2
Australia is a long way from Hollywood, but it appears that the entertainment industry’s troubles respecting women may go across borders. In a scandal that stretches from the top to the bottom of the organisation, Seven West Media Limited has been under fire for its treatment of female employees. At the top, an affair between MD/CEO Tim Worner’s and former employee Amber Harrison has led to multiple lawsuits. It looks like the company won’t have to cover its legal fees after a judge ruled in its favour, but the cost of negative coverage stemming from the incident may eclipse both the A$250,000 bill and A$262,000 in “questionable” company credit card expenditures that (allegedly) got Ms. Harrison into trouble in the first place. At the bottom, the suspension of cadet Amy Taeuber’s employment and refusal to provide support after she raised a complaint against an older male colleague led to more headlines when a recording of a conversation between Ms. Taeuber and an HR manager was leaked to the press. The scandals may already have had an impact on the company’s gender diversity: at the height of the legal proceedings, one of the board’s two female NEDs quit after just two years’ service without explanation.
Downer EDi Limited
Australian Securities Exchange – November 2
Continuing a trend in Australia this season, industrial operations and services provider Downer EDi has a shareholder-submitted proposal on its AGM agenda. Like at BHP Billiton and Origin Energy, the focus is on the company’s approach to climate change, and specifically ensuring that the business “is managed in a manner consistent with the objective of holding global warming to below 2 degrees Celsius above preindustrial levels.” However unlike at Billiton and Origin, where the climate-related proposals were conditional on shareholder approval of a separate constitutional amendment, at Downer investors have taken a more streamlined approach: the climate proposal is itself a constitutional amendment. That means that even if it’s approved, the floodgates would not be open to further requisitioned proposals, unless they also serve as constitutional amendments. In determining whether such a strong step is necessary, shareholders will consider the company’s relatively strong disclosure on climate issues to date: the annual report includes a sustainability report in line with GRI standards along with information on GHG emissions, for which reduction targets have been set and disclosed. In addition, the company received a “B” grade in 2016 from the CDP, and states that it intends to align its discosure with the Taskforce on Climate-related Financial Disclosures’ recommendations going forward.