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

The Boeing Company
New York Stock Exchange April 27

Remember when the 737-MAX was the biggest public safety issue in the world? Travel is not currently a major concern in most quarters, further exacerbating a rocky journey for Boeing that has shaken the foundations of one of America’s most trusted industrial enterprises.

The company has attempted to draw a line under the MAX scandal with changes at the top. The roles of chair and CEO were separated in September 2019 and, after testifying to Congress, Dennis Muilenberg retired at the end of the year. He wasn’t the only sacrificial lamb (the CEO of Boeing Commercial Planes was also let go) but the most notable departure may have been a voluntary one, with former NED Nikki Haley recently resigning in a public protest of the company’s consideration of taking government support. However, besides those departures and the establishment of an Aerospace Safety Committee, the board itself is remains largely unchanged, featuring many of the same directors who served during the development of the 737-MAX continuing to serve.

With the share price down more than 50% and uncertainty over oil prices and the travel/aerospace industries increasing by the day, the board will likely face tough questions about risk management. Shareholders will also consider payments to departing executives under a Say-on-Pay proposal, as well as several shareholder proposals, covering topics ranging from board qualifications to lobbying disclosure.

Bayer AG
Deutsche Börse April 28

When it acquired Monsanto for $63 billion, Bayer was looking to benefit from combining with a world leader in agrochemical and agricultural biotech. However, shareholders are concerned that the board only bought itself trouble.

More than two years after the deal closed, the German multinational is still in court defending itself against claims that exposure to the active ingredient glyphosate led customers of Monsanto’s household herbicide Roundup to develop non-Hodgkin lymphoma (NHL), multiple myeloma, and other damages. As of the fiscal year end, Bayer’s litigation provisions stood at €1.2 billion, but the company warns that outcomes of the mediation process and/or the ongoing litigations may lead to further adjustments. In the meantime, Bayer’s share price declined significantly, with the market capitalisation dipping below the Monsanto purchase price.

At last year’s AGM, these concerns prompted significant shareholder dissent. The ratification of supervisory board acts was supported by just 66.4% of valid votes cast, and the ratification of management board acts failed to pass, receiving just 44.5% support. While the supervisory board has expressed unanimous confidence in both management and company strategy, it has been responsive to shareholders, including by establishing a board-level committee focused on the litigation and conducting an independent audit of due diligence procedures. Moreover, in February it was announced that supervisory board chair Werner Wenning, reportedly CEO Werner Baumann’s most important internal supporter, would step down early at the upcoming AGM. However, until a definitive settlement has been reached, shareholder concerns about the company’s potential liability are likely to remain very high and it is questionable whether trust in the corporate bodies has tangibly increased in the past year.

Groupe Bruxelles Lambert SA
Euronext Brussels April 28

Groupe Bruxelles Lambert is a controlled company. The precise ownership structure is somewhat complicated, centering on a shareholder agreement between the Frère and Demarais families (via Groupe Frère-Bourgeois and Power Corporation of Canada, respectively) through which they hold 50% and 52% of the company’s share capital and voting rights, respectively. Parjointco NV and Pargesa Holding SA are the holding vehicles for the Desmarais and Frère families’ shares. At the company’s upcoming combined extraordinary and annual shareholder meeting, the families have proposed to simplify matters, such that Pargesa would be fully owned by Parjointco. The board touts a range of benefits, including improved governance and transparency, simpler and cleaner group ownership structure, and improved free float and associated trading liquidity.

However, there’s a catch – the deal is conditional on all shareholders approving an amendment to the company’s articles that would allow the introduction of double voting rights – in turn diluting the voting power of shares not held in registered form. It’s an interesting choice for investors: do the benefits of increased liquidity, however marginal, outweigh the practical consequences of losing voting power in what is already a controlled company?

Sonic Automotive, Inc.
New York Stock Exchange
April 29

Across industries and indices, the seismic impact of the COVID-19 crisis is forcing a rethink on executive compensation. Given the timing just before proxy season, it’s understandable that most companies are merely foreshadowing the changes still to come – in many cases, those changes are still to be determined. However, Sonic Automotive isn’t wasting time, and it isn’t leaving much to doubt.

The company has announced very clear, and quite dramatic, changes to its 2020 long-term awards, including scrapping performance-based full-value awards in favor of time-based stock options that feature no performance criteria besides an exercise price. Stock options, which provide holders with a share of appreciation from a set baseline, are still common among growth-stage firms even as their usage has declined in popularity against a broader market context. With virtually every company now arguably in a growth stage, the switch may be one of the first examples of a firm changing their pay program to create greater upside opportunity for executives at a time where markets and the world round are upside down.

It will be interesting to see how shareholders respond to the revised pay program – but it’s not the only area of interest at the company’s upcoming meeting. Earlier this month, CalPERS, a holder of 58,391 shares of the company’s common stock, filed an exempt solicitation letter urging shareholders to vote against seven director nominees based on concerns regarding board diversity, governance and overall responsiveness, as well as the company’s dual-class voting structure.

Intesa Sanpaolo SpA
Borsa Italiana April 27

Intesa Sanpaolo’s executive pay has also been significant affected by COVID-19 – but in a very different way. Rather than make changes to the remuneration policy going forward, the overall plans will remain in place. However CEO Carlo Messina will donate €1 million of his 2019 bonus to specific healthcare initiatives, and 21 of his direct reports will contribute a further €5 million. The board will also make a donation, and other employees have been invited to do likewise. Shareholders are not exempt – on March 30 the company announced that dividends for fiscal year 2019 would be postponed in light of the need for liquidity.

At the company’s upcoming meeting, investors will consider multiple pay proposals, including votes on both the remuneration policy (binding) and report (advisory), as well as a maximum variable pay ratio and the terms of annual incentives. In addition, they will consider an increase in share capital intended to facilitate the acquisition of Unione di Banche Italiane S.p.A. for approximately €2.81 billion.

Assicurazioni Generali
Borsa Italiana April 27

Similar to the situation at Intesa, Assicurazioni Generali has temporarily cut salaries in response to COVID-19 but is otherwise leaving its remuneration arragements as-is. Money saved by those reductions will instead fund the company’s 100 million Extraordinary International Fund, established in response to the pandemic. The company intends to direct 30 million towards extraordinary emergencies in Italy, with the remaining funding to be aimed at situations where the company can make a significant direct impact, including clients that have been impacted by the pandemic.

However, even after the 20% reduction through end-of-year, the CEO’s fixed pay is still up due to a 21% raise granted in May 2019. Shareholders may have questions for the board about that salary increase, given the relatively opaque justification provided; the peer group used for benchmarking remains undisclosed. There is also ample opportunity for reward: the company is going ahead with the introduction of the 2020 PSP for the CEO, which will increase the payout limits by 176% compared to the prior plan. Notably, the company has not reduced its proposed 96 eurocent dividend for 2019, but it has split the distribution into two tranches, to be paid in May and at the year end.

Credit Suisse Group
SIX Swiss Exchange April 30

It’s never the scandal itself, it’s the cover-up. Well, in this case it’s both. During the past year it came to light that COO Pierre-Olivier Bouée had ordered the observation of two former executives, leading to severe reputational damage to the bank. It also led to Mr. Bouée’s dismissal for cause after he reportedly lied during the initial investigation. While the board had initially tried to protect CEO Tidjane Thiam, the revelation that the observation of former employees was not an isolated incident ultimately led to Thiam leaving the bank in February. Despite the change in leadership, shareholders may not be ready to turn the page: the performance of the board has faced criticism from a number of powerful shareholders and other stakeholders, and directors may face questions regarding the treatment of awards, and the disclosure thereof, for the departing executives.

Ovintiv Inc.
Toronto Stock Exchange April 29

North American oil and gas company Ovintiv, formerly known as Encana, is fielding a shareholder proposal from the Pension Plan of the United Church of Canada at its 2020 annual meeting. The proponent is requesting that Ovintiv set climate-related targets that are aligned with the Paris Agreement’s 1.5°C target. Because the Canadian government has ratified the Paris Agreement, companies operating in Canada, including Ovintiv, are subject to a range of provincial and federal regulations designed to limit the country’s carbon emissions. For example, new federal regulations require the oil and gas sector to cut methane emissions by 40-45% below 2012 levels by 2025; the goal was derived from a 2016 summit when it was agreed upon by Mexico, the U.S., and Canada. Meanwhile, Alberta and the federal government are currently negotiating over whether its provincial regulation will take effect in place of federal regulation. Legally, Alberta’s regulations would only apply if they are found to be at least as effective as the federal regulation. Canada is taking a lead in regulating emissions from the oil and gas sector to help meet the goals of the Paris Agreement. As such, companies in the sector are under pressure from investors to demonstrate that they are sufficiently planning for a regulatory environment that is increasingly favorable to emissions regulation amidst a decarbonizing economy.

Woodside Petroleum Limited
Australian Securities Exchange April 30

At its April 30 annual meeting, Woodside Petroleum’s shareholders will vote on two climate-related resolutions and one on its reputational advertising, all submitted by ACCR. As is commonplace for shareholder resolutions in Australia, formal votes on the proposals will only be tabulated if an accompanying resolution to allow for voting on nonbinding proposals is approved.

The first climate-related resolution asks Woodside to disclose Paris-aligned emissions targets, CapEx, and a remuneration policy to incentivise progress against the targets. Woodside has targets to improve its energy efficiency and eliminate flaring, but has not otherwise disclosed targets to meet its aspiration to achieve net-zero direct emissions by 2050.

The second climate-related resolution requests that Woodside report on its direct and indirect lobbying activities relating to climate, resources, and/or energy policy, covering two years and addressing the Paris goals. If any of these direct and indirect lobbying activities are found to be out of alignment with the Paris goals, ACCR requests that Woodside take action to correct this misalignment. Shareholder scrutiny on this topic in recent years has driven Woodside and Origin to produce industry association position statements, while Santos has not yet joined its peers.

ACCR is also asking shareholders to vote on a novel proposal asking Woodside to review its corporate reputation activities against the OECD Guidelines and discontinue these activities if they are found to be out of alignment with the OECD Guidelines or if they are targeted at children. Although the oil and gas industry’s advertising has been criticised for a plethora of reasons for many years, BP’s clean energy advertising elicited enough backlash to ultimately result in BP’s announcement that it would stop “corporate reputation advertising” altogether. ACCR’s resolution at Woodside essentially seeks the same objective.

Vale SA
Bovespa – Novo Mercado April 30

Vale’s 2019 AGM came in the immediate aftermath of the tragic Brumadinho dam rupture. Given the circumstances, there had been little chance to fully assess the magnitude of the collapse, which killed 270 people. This year, with most of the facts leading to the disaster already clarified and on the table, shareholders will consider the company’s revised ESG practices and overall response to its second large disaster in the past six years, and determine if executive bonuses, which include payouts under a safety component, are appropriate. Shareholders will have to assess the performance of the board as a whole – the company continues to eschew individual director elections in favor of an ‘all-or-nothing’ slate vote.

COVID-19 Updates

In light of the dynamic nature of the ongoing crisis, we have compiled additional resources to help navigate the proxy season, including:

  • a tracker collecting all shareholder meetings that have been delayed or postponed; and
  • a market-by-market roundup of the impact on proxy voting. The most recent updates are below; for the full roundup, see our blog post.

Government Decree No. 102/2020 on divergent provisions concerning the operation of personal and asset pooling organizations (“The Decree”), which entered into force on April 10, 2020, authorises company boards instead of shareholders to pass AGM resolutions. If an AGM has been called by the time of entry into force of the Decree, the board is authorised to pass resolutions on all the items of the already published meeting agenda and modify previously proposed resolutions if it deems necessary.

Within 30 days of the cessation of the state of emergency, shareholders holding at least 1% of the votes may request that a general meeting be convened for the subsequent approval of resolutions of the general meeting taken by the board other than approval of the annual accounts and allocation of profits and dividends.  A subsequent shareholder approval of accounts and dividend allocation decision in an EGM is required only if so requested in writing by May 31, 2020 by shareholders representing more than 1% of the votes, in which case dividends cannot be paid before such EGM.

In any case, annual accounts must be approved by company boards by April 30, 2020. The boards then may resolve to distribute dividends to shareholders.

The terms of office of directors and independent auditors expiring during the state of emergency should be automatically extended until the next general meeting. Similar provisions apply to the previously authorised share buy back programs. 

On March 31, 2020, an amendment to the Act on specific solutions related to the preventing, counteracting and combating COVID-19, other infectious diseases and crisis situations caused by them, entered into force. Participation in the general meeting is now possible using electronic means of communication (unless articles of association restrict this type of meetings). Public companies must ensure that the general meeting is broadcast in real time.In addition, the Ministry of Finance also issued an ordinance in regard to specific deadlines for annual accounts and other financial and non-financial reports. To this end, preparation of the annual financial statements, annual activity reports and  reports on non-financial information has been extended by three months with a deadline now expiring on June 30, 2020. Further, approval of the annual financial statements has been extended by three months with a deadline now of September 30, 2020.  For companies subject to supervision by the Polish Financial Supervision Authority these deadlines are extended by two months. 

On April 13, the Accounting and Corporate Regulatory Authority (“ACRA”), the Monetary Authority of Singapore, and Singapore Exchange Regulation (“SGX RegCo”) issued a joint statement for the conducting of general meetings. The joint statement includes a checklist for how listed and unlisted entities may conduct their general meetings during the period of time when elevated safe distancing measures are in place. The checklist was included in the COVID-19 (Temporary Measures) Act 2020 and the COVID-19 (Temporary Measures) (Alternative Arrangements for Meetings for Companies, Variable Capital Companies, Business Trusts, Unit Trusts and Debenture Holders) Order 2020.The checklist notes that listed and unlisted entities may hold their general meetings virtually. For virtual meetings, shareholder must be allowed to submit their questions up to 72 hours before the holding of a general meeting, while questions may be submitted via email and/or post and boards must address the substantial and relevant questions prior to, or at general meetings, including follow-up questions. Voting will be primarily done through proxy voting, unless an entity electronic voting. Proxy forms will be allowed to emailed, provided the proxy form is signed and is enclosed as a PDF.

On March 31, 2020, with the aim of preserving equity capitals of companies and in line with the Article 13/5 of the Regulation Regarding Shareholder Meetings’ Principles and Procedures and  Representatives of the Custom and Trade Ministry, the Turkish Ministry of Trade sent a writ to Turkish Union of Chambers and Exchange Commodities to make an announcement that Turkish companies, except the ones that are controlled by the state, will not be able to distribute cash dividends from previous years’ profit accounts and the cash dividend to be distributed from FY2019 profit accounts will not exceed 25% of the total net profit. Further, boards of directors will not be allowed to distribute interim dividends.