Important highlights from upcoming meetings, provided by Glass Lewis’ global research team

AMP Limited Australian Stock Exchange – May 2

2018 saw AMP wear significant reputational damage due to allegations arising out of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. In response AMP has significantly refreshed its board and executive team, including the appointment of David Murray as the new board chair in June 2018, the announcement of the sale of its wealth protection and mature business segment (“AMP Life”) in October 2018 and appointment of offshore recruit Francesco de Ferrari as the new MD/CEO in December 2018.

The sale of AMP Life has caused contention. Following announcement of the sale for A$3.45 billion, AMP’s share price fell 24.5%, eroding market capitalisation by A$2.38 billion. Investors have since taken to the streets with protest made clear in Australian business newspapers and lobbying of stock exchange operator ASX Limited to require that the deal be subject to shareholder approval. This latter point is due to ASX listing rules requiring shareholder approval whenever an entity disposes of its “main undertaking”. ASX Limited reconfirmed that there is no requirement for shareholder approval for the sale of AMP Life on a variety of measures which show AMP Life accounting for 24% to 34% of key AMP measures (revenue, EBITDA, NPAT, total assets, underlying profit), which is below the 50% threshold to be considered a “main undertaking”. Shareholder groups have two issues with this: (i) scepticism that the measures used to demonstrate AMP Life is not a “main undertaking” were inappropriate, and (ii) that deals of such significance to a group, irrespective of listing rule requirements, nearly always go to shareholder approval as a matter of governance.

As a result of the AMP Life sale, and of David Murray’s unorthodox public positions on corporate governance, some shareholders have campaigned against his re-election and that of certain other directors associated with the AMP Life sale. This protest is made in a context where the board has already had significant turnover, including three chairs since 2016 (excluding interim chairs), and is steering the company through a structural transformation.

The 2019 AGM will be one to watch as shareholders will be balancing between (i) protesting against the AMP Life sale and related governance concerns, and (ii) a desire for board stability to best support AMP through its transformation.

The Boeing Company New York Stock Exchange – April 30

As Boeing’s signature 737-MAX aircraft sits grounded following multiple crashes, the company’s annual shareholder meeting is taking place amidst a high level of scrutiny, both from investors and other stakeholders.

With external eyes focused on the company’s navigation software and cozy relationship to the U.S. Federal Aviation Authority, investors voting on the board of directors will have to consider whether appropriate oversight of safety procedures was in place – and whether to hold board members accountable while investigations are still ongoing. For its part, the company has established a new board committee to review policies and processes for aircraft design and development.

The incidents have already had a significant impact on Boeing’s reputation and financial performance, prompting US carriers to cancel 737-MAX routes and Indonesia’s Garuda to request cancellation of a $4.9 billion aircraft order. The company also faces multiple lawsuits from the families of victims and from disgruntled shareholders.

Risk management isn’t the only issue on the agenda. While the company does not have any particularly problematic compensation practices, the Say-on-Pay proposal could serve as a lightning rod for opposition. Elsewhere, investors will consider a series of shareholder proposals covering a range of topics, including governance (independent chair, proxy access), executive compensation (share retention, metric adjustments) and lobbying disclosure.

SCOR SE Euronext Paris – April 26

SCOR and its CEO/chair Dennis Kessler spent much of past year fighting off a takeover bid from Covéa, a French mutual insurer that owns approximately 8% of the issued share capital. After all of the intrigue Covéa announced that it was moving on, but this may have represented a pyrrhic victory — at least for Mr. Kessler. After publicly questioning whether the board’s reaction to the bid was in the interest of most shareholders or those of the chair and CEO, CIAM has submitted a shareholder proposal to remove him from the board at the 2019 AGM. The board opposes the shareholder proposal, stating that CIAM’s statements are “seriously unfounded, inaccurate and misleading”. CIAM has also issued recommendations on several board re-elections, and on Mr. Kessler’s remuneration.

Pay is already an area of shareholder focus, with over 21% voting against the proposal last year. In response to that result, the compensation and nomination committee took steps to improve disclosure regarding performance achievement and revised the terms of equity awards to prevent situations where overperformance in one area offset underperformance in others. However it may still face questions about a benchmarking peer group full of much larger companies, many of which compete in very different markets.

BRF S.A.  Bovespa – Novo Mercado – April 29

Two years on, BRF is still reeling from Operação Carne Fraca – but the end may be in sight. While the investigation initially included fellow meatpacker JBS, more recent phases have focused on BRF, with former CEO Pedro de Andrade Faria and former vice president Hélio Rubens Mendes dos Santos Júnior arrested, and the company’s EU exports suspended. The final report from the Polícia Federal accused Mr. Faria, along with former chair Abilio Diniz, of criminal organization, crime against public health, and larceny. All current employees who are referenced in the report have been granted a leave of absence. In recent months, the company has been negotiating the terms of a leniency agreement, which would require the payment of damages and full collaboration with ongoing investigations – but would save the company from potentially being frozen out of credit from Brazilian state-owned banks.

In addition to the fallout from the scandal, shareholders will consider a remuneration policy that allows non-executive directors to participate in the long-term incentive. They won’t get to consider the three nominees to the supervisory council individually – instead, voting is on a slate basis

BE Semiconductor Industries Euronext Amsterdam – April 26

Shareholders will consider an assortment of changes to the executive remuneration policy at BE Semiconductor – most of which appear to result in a significant uptick in pay opportunity. The company has proposed to increase the salary benchmarking ceiling from the 75th to the 90th percentile of a new altered peer group; to increase the short-term target payout and maximum opportunity; and to increase the long-term target payout, indirectly increasing the CEO’s maximum opportunity. The amended policy would also implement a five-year lockup period for additional discretionary share awards – however, while the lockup would encourage long-termism, shareholders may be questioning why executives continue to receive discretionary share awards in the first place. Last year, CEO Richard Blickman got 120,000 discretionary performance shares valued at €4,551,000, and over the last five years, the board has repeatedly used its authority to grant maximum discretionary awards. Shareholders will also have to consider whether to take action with regard to the composition of the board, which does not meet Dutch gender diversity requirements.

Papa John’s International, Inc. Nasdaq – April 30

Papa John’s upcoming AGM is the company’s first without a John on the board. More specifically, it’s the first since an acrimonious split with “papa” himself. Founder John Schnatter, who still owns roughly 31% of the company, resigned from his role as chair back in July 2018 after using racial slurs during a conference call. He’d already given up the CEO position late in 2017 after criticizing the NFL for not taking action against protesting players.

However, Schnatter subsequently expressed regret for having resigned, leading to a public feud and a lawsuit alleging the board had breached its fiduciary duties — an accusation made based on a “gut feeling” (it’s unclear whether Schnatter had eaten a Papa John’s pizza before developing this feeling). Things heated up again when the company entered an agreement with Starboard Value to invest up to $250 million, prompting Mr. Schnatter to offer the company his own deal (it was rejected) and subsequently file a complaint with the Court of Chancery of Delaware.

The parties finalized a settlement agreement back in March, which included amendments to the company’s poison pill that will now go to shareholder vote. The shareholder rights plan, initially adopted when this drama kicked off, had previously included an “Acting in Concert” provision that Schnatter believes “goes far beyond Delaware law by unreasonably curtailing the rights and legitimate interests of shareholders.” That would be removed as part of a three-year extension intended to set clear boundaries for the former founder and still largest shareholder.

While the dust may have settled, investors may not recognize the current board. Along with Schnatter’s departure, Mark Shapiro will not be standing for election, and four new independent directors were appointed March 14 along with president and CEO Steven Ritchie – and closely followed by the company’s latest franchise owner, endorser and diretor, Shaquille O’Neal. Who needs Papa?

Eurazeo Euronext Paris– April 25

More than a year after Patrick Sayer stepped down as chair of the management board, shareholders will get one last vote on his remuneration. The nearly €4.4 million total sounds generous for just one-quarter of 2018, but probably won’t be too much of a surprise — most of that relates to his severance agreement, which received nearly 20% opposition in an advisory vote at last year’s AGM. This vote will be on a binding basis. Besides the sheer size the payments raised eyebrows due to the terms of Sayer’s departure, which was not forced. Instead he simply joined the supervisory board, retaining unvested equity awards with no pro-rating. Beyond the vote on Sayer’s 2018 remuneration, it will be interesting to see if the board’s lack of responsiveness to last year’s AGM results prompts shareholders to take direct action against any directors.

Vale SA Bovespa – Novo Mercado – April 30

Once again Vale’s annual meeting is being held under tragic circumstances. The collapse of the Córrego de Feijão tailings dam has become Brazil’s deadliest mining disaster in more than 50 years, and is the second dam rupture linked to Vale since 2015, when the Samarco burst occurred. The company has announced that all dams built in the upstream method will be decommissioned, and has committed to structural improvements relating to sediment containment. Further, it has cooperated in signing agreements with a wide range of regional and federal legal, regulatory and political offices.

Despite these efforts, Vale is facing significant scrutiny across multiple investigations. Permits for other projects have been rescinded, existing operations have been suspended by court order, and R$ billions have been frozen to cover potential damages. Moreover, reports indicate that internal warnings of potential dangers had gone unheeded. Eight employees have already been arrested, accused of knowing what could happen but doing nothing about it, and the state authorities are reportedly close to concluding their investigation and issuing comprehensive charges, which could include murder, manslaughter, environmental damage, and false representation. Prosecutors are also preparing possible criminal charges of false representation against employees of the German inspection firm that certified the dam.