Important highlights from upcoming meetings, provided by Glass Lewis’ global research team:
Deutsche Telekom
Deutsche Börse April 1 AGM
Thanks to the implementation of Shareholder Rights Directive II, companies across several European markets are introducing regular votes on remuneration policies and their implementation. That includes Germany, where shareholders at Deutsche Telekom, the company behind T Mobile, will get their first say on the management board pay policy for over a decade. The vote already appears to have sparked additional engagement between the board and shareholders, specifically regarding a notable level of discretion afforded to the board in determining bonuses outside the normal STI structure. Subsequent to the release of the annual report and meeting notice, which already included relatively robust disclosure, the company released a supplementary document explaining the rationale behind the discretionary bonus authority, along with more information about how it has been and could be used. While rare shareholder revolts over pay tend to get the headlines, the opportunity for these votes to promote additional discussion and clarifying disclosure should not go unnoticed.
Speaking of discussion and participation – the meeting agenda also includes a shareholder proposal from German investor association Deutsche Schutzvereinigung für Wertpapierbesitz e.V., acting on behalf of and by proxy for asset manager Bayerninvest Kapitalverwaltungsgesellschaft mbH, that would allow shareholders to ask questions during the AGM, rather than having to submit them in advance. A similar proposal received broad support from a majority of shareholders at Siemens – but ultimately failed to receive the requisite 75% super-majority approval. The same standard applies here.
Castellum AB
NASDAQ Stockholm March 25 AGM
Director nominations in Sweden work a little differently than in most markets. Rather than being selected by a committee of the board, candidates are proposed by an external committee comprising shareholder representatives and the board chair. The process is generally routine. Not so at real estate Castellum, where the external nomination committee has failed to come to a unanimous decision. As a result, shareholders will consider two separate slates of directors, and three voting options. As if that’s not complicated enough, voting in favor of more than one option will lead to those votes being invalidated.
More specifically, there are two “simplified” prix fixe voting options comprising whole slates of directors; or, shareholders can pick and choose from an a la carte menu of director and chair candidates. The two seven-person slates, which share four nominees in common, were effectively proposed by the company’s two largest shareholders, Rutger Arnhult (17.8%) and Stichting Pensioenfonds ABP (5.8%). And while disclosure regarding the competing slates has been somewhat muted compared to typical contests in other markets, the underlying narrative appears to be an attempt by Arnhult to secure more influence by reconstituting the board and having himself appointed as its chair.
Investors opting for the simplified proposals can only support one of the two. Those choosing to select individual directors may support no more than seven in total, and only one of two candidates for chairman. For the avoidance of doubt: if more than seven candidates are selected and/or if both candidates for chairman are selected, those votes will be invalidated. Measure twice, vote once.
Telecom Italia S.p.A.
Borsa Italiana March 31 AGM
Italy is another market with unusual board election procedures. Shareholders choose between multiple slates, and the resulting board is composed of a combination of directors weighted towards the winning “majority” slate, but also including representatives from the “minority” slate. Long dominated by major shareholders, that process has gotten more unpredictable over the past few years, as institutional investors are increasingly pushing for independent oversight – for example at Telecom Italia, where U.S.-based activist Elliott Management’s slate of independent directors won the support of Italian institutions to wrest de facto board control from major shareholder Vivendi back in 2018.
The company’s upcoming AGM marks the first full board election since then, and the first time that the outgoing board is presenting its own slate of candidates, another recent market trend. This time around, the election does not appear to be contentious. The board has proposed a ten-person slate, and institutional investors have proposed a five person slate – and with a proposed board size of 15, any possible voting outcome will likely result in the same board composition going forward.
However, elections for the board of statutory auditors (BoSA) may be more dramatic. Three slates have been proposed – a five person slate by the same institutional investors, representing 1.24% of share capital, who have proposed the smaller five person slate of directors; a four person slate by Cassa Depositi e Prestiti, which holds 9.81% of the share capital; and a seven person slate by Vivendi, which remains a 24% shareholder. The winning slate will get three seats on the BoSA, and two alternates, while the remaining two seats and two alternates will be drawn from the other slates on a proportional basis.
Klabin S.A.
Bovespa — Level 2 March 24 AGM
No discussion of unusual board election procedures would be complete without mentioning Brazil. Minority shareholder Luiz Barsi Filho has presented Heloísa Belotti Bedicks as a candidate for election to the board at the upcoming annual meeting of paper giant Klabin. This in itself would not be unusual except that, as proposed by Mr. Barsi Filho, shareholders will only get to vote on Ms. Bedicks as an individual candidate if they also opt for cumulative voting. Under Brazilian voting rules, this method can be implemented up to 48 hours before the meeting if requested by at least 5% of the company’s share capital. However even if they don’t, the company has ensured that she still has an opportunity to join the board by voluntarily proposing a second slate, which includes Ms. Bedicks in place of a nominee representing the controlling party.
Need more background on Brazilian voting practices? You can find an overview on our Supplementary Guidance page, along with topic-specific FAQs and explanations of our methodologies. There’s even a Brazil voting flowchart.