Important highlights from upcoming meetings, provided by Glass Lewis’ global research team
Exxon Mobil Corporation New York Stock Exchange – May 29
Scientists have been raising alarms concerning the implications of global climate change for many years; recently investors have been echoing these concerns, with a focus on how companies’ operations are contributing to a changing climate. Investors have formed a group, Climate Action 100+, targeted at engaging with the world’s largest carbon emitters. As a large oil and gas company, Exxon was very much in the sights of these investors.
Two members of this group, the New York City Comptroller and the Church of England submitted a proposal for Exxon’s 2019 meeting targeted at getting the oil major to set emissions reductions targets, akin to what European peers like BP, Shell and Total, had established. However, the company requested that the SEC allow the proposal’s exclusion, and the SEC agreed to Exxon’s no action request. As a result, the New York State Comptroller and the Church of England have filed an exempt solicitation stating that they were intending to vote against the entire board, and encouraging other shareholders to “implement a strong voting stance on director elections in line with their own voting policies.”
However, although the Climate Action 100+ proposal was excluded, a number of climate-related and environmental shareholder proposals still made it on to the ballot. Accordingly, shareholders will be voting on proposals requesting that Exxon add a climate change committee to its board and that it report on the public health risks associated with its petrochemical facilities in the Gulf Coast.
Gerresheimer AG Deutsche Börse – June 6
After only five months in the role of Gerresheimer’s CEO, the company announced that Dr. Christian Fischer had “asked for an amicable premature termination of his services due to personal reasons”, leaving with immediate effect. That turned out to be a very costly decision for the company and its owners. Dr. Fischer received €4.257 million for those few months of service, including €4,020,000 “[i]n connection with his unexpected departure”. The amount was classified as “fixed remuneration” by the company, with no further disclosure provided in this regard.
At first glance, it’s hard to fathom how someone who received €317,000 in base salary could get an extra €4 million on departure – after all, severance payments are capped at two years’ of total remuneration or the remaining term of the contract, in line with the provisions of the German Corporate Governance Code. However, Dr. Fischer is also subject to a two-year non-competition clause, which entitles him to his annual base salary and 100% of the annual bonus “to be paid on attainment of the financial targets”. In addition, Dr. Fischer received a series of awards in connection with his appointment, including pro-rated cash incentives granted assuming that targets would be achieved, and future tranches of stock appreciation rights. Were these included in the calculation of the severance? And just why did he leave? At this time, it seems shareholders may have to cast their votes without knowing.
Facebook, Inc. NASDAQ – May 30
Facebook’s whole timeline is engulfed in controversy. Within the last year, shareholders have watched as the social media behemoth’s involvement with the Cambridge Analytica scandal resulted in its CEO being brought before Congress, the Department of Housing and Urban Development reopened a case concerning Facebook allowing its advertisers to engage in discriminatory targeting, and as its platform was used to stream several high profile crimes, including the Christchurch Mosque shooting. These incidents highlight both the breadth of Facebook’s reach and dominance in society, as well as the significant and varied risks to which it is exposed. As a result of these risks, proponents have submitted eight shareholder proposals, many of which address a number of these high profile scandals, which will go to a vote at Facebook’s upcoming meeting.
In addition to proposals on issues of the political ideology of the board and employees, how the content on its platform is governed, and how it is ensuring that women are being paid equally to their male counterparts, shareholders have also submitted for a vote a number of proposals addressing the company’s governance framework. In particular, shareholders will vote on proposals asking the firm to eliminate its dual class share structure, implement a majority vote standard for director elections, and appoint an independent chair of the board. Further, Facebook is also facing a high-profile vote-no campaign targeted at asking shareholders to vote against Mark Zuckerberg’s reelection. However, despite shareholder concerns regarding the societal implications of Facebook’s products and the company’s governance, significant shareholder opposition is unlikely to result in significant votes against management; as a result of Facebook’s dual-class structure, Zuckerberg controls approximately 58% of the voting power.
Air France – KLM Euronext Paris – May 28
When Benjamin Smith was appointed CEO of Air France – KLM late last summer, all eyes were on his ability to make a deal with the company’s trade unions. His predecessor, Jean-Marc Janaillac, had resigned after his attempt to resolve weeks of strikes by offering a wage increase fell flat. Smith, whose experience overseeing Air Canada’s collective bargaining talks with trade unions was likely a factor in getting the job, came through. After almost one year from the rejection of the previous deal, on February 19, 2019, Air France pilots signed their new pay agreement, from which they will get a 4.3% raise in return for concessions including more flexibility on leave and the sharing of routes with KLM. The deal was signed by the dominant SNPL pilots union after receiving 85% support.
At the company’s upcoming annual meeting, the focus will be on Mr. Smith’s other deal – the one he received for joining the company. Several elements of the package could draw questions, most notably the absence of performance conditions on Smith’s short- and long-term incentive awards, and the decision to pay out all 2018 awards in cash. In addition, there’s an extensive list of benefits relating to Mr. Smith’s appointment and relocation but no disclosed price tag, and shareholders will note a significant hike in base salary compared to that of Mr. Janaillac.