Hospitality Properties Trust
NASDAQ – June 14
Governance problems are a common theme among publicly traded REITs affiliated with The RMR Group, and Hospitality Properties Trust is no exception. The Trust has proven to be unresponsive to shareholder concerns over the past few years, with the board failing to implement several majority supported shareholder proposals and implementing a classified board without shareholder approval. At the 2017 annual meeting, shareholder proposals regarding proxy access and the company’s opt-out of Maryland’s Unsolicited Takeover Act were approved; however, the board did not respond to either.
Unsurprisingly, shareholders have also demonstrated their discontent in the election of trustees. Last year, John L. Harrington failed to receive majority support, receiving 80% withhold votes cast at the 2017 annual meeting. Pursuant to the company’s majority voting standard, Mr. Harrington resigned from the board following the meeting; however, the remaining members of the board still determined to elect Mr. Harrington as the independent Class I trustee.
It appears that shareholders are becoming increasingly concerned with the company’s ongoing governance problems and continued service of directors who fail to receive majority shareholder support, as a shareholder proposal regarding majority voting for the election of directors appears on this year’s ballot. It will be interesting to see if the board’s pattern of non-responsiveness will continue following the 2018 meeting.
London Stock Exchange – June 13
Sir Martin Sorrell built WPP from a wire basket company into a global PR powerhouse, and the scale of his remuneration ensured that the company’s shareholder meetings were consistently in the news year after year. Sir Martin stepped down in April 2018 amidst allegations of potential misuse of company assets along with improper behaviour, but his pay is raising eyebrows one last time due to some murky disclosure regarding the circumstances (and treatment) of his departure. Although an internal investigation into the allegations had already been completed when he decided to resign, the interim executive chair stated that this occurred “before the board had taken into consideration the outcome of the investigation and determined whether or not it was appropriate to take action.” Absent further information, it’s a bit unclear as to whether treating Sir Martin as a “good leaver” is appropriate, and the board may face tough questions regarding their “oversight” of the situation, along with succession planning.
NASDAQ – June 13
Although Celgene Corporation successfully completed its $9 billion acquisition of Juno Therapeutics in March 2018 and substantially refreshed its board in the past year, the company may still need to provide answers to shareholders on a few ongoing matters at this year’s annual meeting. In December 2016, the board responded to a passed shareholder proposal requesting the right to call special meetings with an official bylaw, albeit with a higher required holding percentage than originally proposed. Shareholders expressed disapproval of this response by voting against the board’s nominating and governance committee at last year’s annual meeting. With shareholder proposals on the existing proxy access provisions and an independent board chair to be presented at this year’s annual meeting, Celgene could be under pressure to respond more effectively to shareholder requests should either proposal pass.
NASDAQ – June 12
The executive team at Biogen has changed significantly in the past two years. In addition to Michel Vounatsos, who was appointed as CEO in January 2017, the company appointed a new CFO, Jeffery Capello, in December 2017. These senior executive changes were accompanied by further management appointments throughout the year, including the appointment of a new chief human resources officer and a chief information officer. Biogen’s board, on the other hand, has remained fairly static for some time. With the exception of the CEO change, the same directors have been serving since June 2014, when the former chair retired. Moreover, the company has not appointed any new independent directors since 2010. At this year’s meeting, it will be interesting to see how shareholders respond to this limited refreshment, especially as investors have recently raised concerns regarding the company’s drug pipeline and ability to generate future sales growth amidst a recent share price decline.
American Airlines Group
NASDAQ – June 13
The right to call special meetings is on the minds of both the board and shareholders ahead of this year’s American Airlines AGM, but there seems to be some disagreement on how many shareholders should have that right. This year’s ballot has both a management proposal and shareholder proposal to amend the company’s certificate of incorporation to allow shareholders to call special meetings. But while management’s proposal would grant this right to 20% of its shareholders, the shareholder proposal is requesting the threshold be set lower, at 10%. The board argues that most of its S&P 500 peers have set their bar at 25% or higher, and that a 10% threshold would open the door to corporate waste and give significant holders disproportionate influence. The company certainly has some significant holders, two of whom exceed the 10% threshold by themselves, but they’re not exactly institutions known for massive disruptions, making this an interesting one to watch.
Best Buy Co., Inc.
New York Stock Exchange – June 12
After years of steady increases, with female representation on its board rising from 22% in 2015 to 40% in 2016, Best Buy is set to achieve gender parity at this year’s annual meeting. With the addition of Richelle P. Parham to the board in March of this year and Gérard R. Vittecoq not standing for re-election at the annual meeting, shareholders now have the chance to confirm a balanced board, with five men and five women. At a time when increasing scrutiny has been placed on the gender diversity of company boards, Best Buy enters a rare club, joining only six other S&P 500 companies to have achieved this level of gender parity (as of June 2017). This strong female representation doesn’t stop at the board level; the company’s executive team includes CFO Corie S. Barry and president of multichannel retail Shari L. Ballard.
New York Stock Exchange – June 13
At least year’s Caterpillar meeting, three shareholder proposals were supported by more than a quarter of shareholders. One of those, regarding an independent board chair, has effectively been implemented with the appointment of David Calhoun; however the other two, regarding clawback of executive incentives and the right to call a special meeting, are back on the agenda for 2018, along with a new proposal looking at the board’s human rights expertise. Though the ongoing investigation on Caterpillar’s tax evasion in Switzerland continues to loom over the company, this year’s annual meeting presents chances for meaningful change in its corporate governance practices.
Dollar Tree, Inc.
NASDAQ – June 14
The Dollar Tree is shedding some leaves and trimming branches from the top. As shareholders may be aware, the company is going through a transition phase at the executive level. Former CEO Bob Sasser was named executive chair of the board, and Gary M. Philbin was named the company’s CEO effective on September 18, 2017. In connection with his promotion, Mr. Philbin will oversee operations of both the Dollar Tree and Family Dollar stores. Following the sudden passing of director Macon Brock, Jr. in December 2017, the company appointed two new directors, Stephanie P. Stahl and Jeffrey G. Naylor, to the board in January and March of 2018, respectively. In addition, with the retirement of H. Ray Compton, who served as a director since 1986, the board has significantly reduced its average non-executive director tenure, from 15 years in 2017 to 10 years as of this year’s annual meeting.