Important highlights from upcoming meetings, provided by Glass Lewis’ global research team:
New York Stock Exchange March 27
Better late than never? Credicorp, a financial services company trading on the NYSE but incorporated in Bermuda, is facing sanctions in Peru (where its headquarters are located) after executive chair Dionisio Paoletti disclosed in November 2019 that he had contributed $3.65 million to fund the Peruvian presidential campaign of Keiko Fujimori from 2011-2016. At the end of the year, the company disclosed in a Form 6-K that it was notified by the Peruvian authorities that they were being sanctioned for not having disclosed the contributions earlier. In a November 2019 interview with El Comerico newspaper, Mr. Paoletti said he had not previously disclosed the contribution because he feared retribution against the company and his family. He has also asserted that the contributions were intended to “to help combat the threat to our country posed by the [Hugo] Chávez regime,” and that the contributions were made in coordination with members of the Company’s senior management team and did not pose any legal liability to the company. To date, two supervised companies within the Credicorp group have been fined approximately US$124,000 in total under the sanctions.
The campaign contributions have garnered headlines, but there are also some underlying governance issues that may warrant attention: for example, several board committees have significant non-independent representation, and following recent director changes there does not appear to be a financial expert in place. Moreover, as a foreign private issuer, Credicorp does not offer annual or individual director elections – instead, all directors stand for election as a slate once every three years. As such, shareholders looking to address concerns regarding independence and oversight will have to consider whether they warrant a wholesale rejection of the board.
Micro Focus International plc
London Stock Exchange March 25
Micro Focus’s AGM comes one year after a majority of shareholders rejected the company’s remuneration report. Opposition was largely centered on the company’s “Additional Share Grants” (“ASG”) plan, whereby executives are eligible to receive special awards on top of their normal incentives when a material acquisition has been made. The awards in question were originally granted following the acquisition of HPE Software in September 2017 and were due to vest in September 2019; however, they were subsequently replaced with awards that had identical terms — but whose performance and vesting periods started from the date of completion of the acquisition (rather than the announcement of the transaction) and ended a year later (i.e. September 2020 instead of September 2019), to align the vesting date with the Company’s 2020 business plan.
Following the rejection, the board engaged with its shareholders and discontinued the ASG plan, along with a series of responsive changes to investor concerns about the remuneration structure. Some of the other steps taken towards best practice include the planned alignment of pension contributions with the wider workforce and the introduction of additional performance measures for the annual bonus and LTIP. Furthermore, the introduction of enhanced recovery provisions, post-vesting holding requirements, and the addition of a post-cessation shareholding requirement should serve to further promote alignment between executives’ interests and those of shareholders. Shareholders will have to decide whether the revised remuneration policy is worthy of their support.
F.L. Smidth & Co
NASDAQ Copenhagen March 25
A former employee of Danish engineering company F.L. Smidth & Co is attempting to take an unusual route to the top of the corporate ladder: he’s nominated himself to serve on the board. Unfortunately for curious shareholders, it does not appear that Mr. Fangel has publicly disclosed a rationale for seeking a seat on the board, nor has the board set out its reasons for not supporting his candidacy. Elsewhere on the agenda, the company is seeking approval of its remuneration policy, which has been updated to include best practice safeguards like clawback and an executive shareholding requirement. The policy would be in place for four years and the vote is binding; however article amendments proposed in accordance with the EU SRD II regulation would give shareholders an annual advisory vote on remuneration going forward as well.
The meeting comes in the wake of revelations that back in 2010, two company employees were part of a scheme to overcharge a Tunisian cement producer by €30 million in total. In November, one of the employees (both of whom have been promoted) was sentenced to six years in prison by the Tunisian state; it appears that further details of the scandal are still being uncovered.
SIX Swiss Exchange March 26
With mounting shareholder pressure regarding its results and strategy, the Swiss multinational ABB announced a corporate and strategic reorganisation in December 2018, which included the spin-off and sale of a controlling stake in its Power Grids Division. With restructuring well underway, it came as a big surprise when veteran CEO Ulrich Spiesshofer left his position with immediate effect in April 2019. Board chair Peter Voser stepped into the fold as interim CEO while the board searched for a long-term successor. The market reacted positively to the appointment of former Sandvik chief executive Björn Rosengren, who assumed the position of CEO effective March 1, 2020.
However, as Mr. Rosengren meets shareholders for the first time at the 2020 AGM, he is likely to face pointed questions regarding the company’s growth ambitions and how he intends to boost revenues and profitability. The board may also face questions regarding the termination and non-compete payments to the former CEO, which appear to be towards the contractual maximum despite his sudden departure.
NASDAQ Stockholm March 26
The massive Nordic/Baltic money laundering scandal looks set to dominate proceedings at Swedbank’s AGM for the second year running. At last year’s meeting, the fallout was immediate and significant: after shareholders voted against discharging president and CEO Birgitte Bonnesen from liability, she was dismissed by the board. Since then the scandal has continued to unfold—including accusations by Sweden’s chief financial prosecutor that the company had blocked a police investigation, significant changes to the board and executive team (including the August 2019 appointment of Jens Henriksson as president and CEO), and the establishment of an Anti-Financial Crime Unit within the bank. Shareholders can anticipate some resolution – the Swedish Financial Supervisory Authority (FSA) has scheduled an extra board meeting for March 19, one week before the company’s AGM, and is expected to announce the results of their investigation. However, that won’t quite be the end of the matter: once the investigation is complete, Swedish and Estonian authorities are expected to announce sanctions.