NASDAQ June 4
As of late last year, the “streaming wars” looked set to be one of the biggest non-political news stories of 2020. Between longtime competitors like Hulu and Amazon, recent entrants Apple TV and Disney+, and pending launches from HBOMax and Peacock, analysts questioned whether Netflix would be able to retain its subscriber base, let alone keep growing. Fast forward to the company’s pending AGM: the marketplace is certainly getting a lot more crowded, but the original streamer’s head-start appears to count for something, and for many customers the supposed problem of not having enough time to watch everything is … not currently a problem. Indeed, with millions of people stuck on the sofa during the pandemic, Netflix is one of the few companies that has performed well on a YTD-basis.
Over the last decade, Netflix has developed a reputation for consistent growth, and for a unique approach to corporate governance and executive compensation. Since 2011, over twenty shareholder proposals have received majority approval, covering topics such as poison pills, majority voting, declassifying the board and eliminating supermajority vote requirements. None have been implemented by the board. Similarly, in the face of escalating Say-on-Pay opposition, the board has improved its disclosure but does not appear to have addressed quantum and structural concerns regarding the compensation program. Now, investor concerns are shifting to the directors themselves — at the 2019 AGM, all four nominees received less than majority support from shareholders. While the company has refrained from changing its practices or overall approach, the unrest has prompted increased outreach to shareholders. Whether that (and growth in the face of a pandemic) is enough to win shareholder support remains to be seen. Even if not, one probably shouldn’t expect the company to make any big changes in response to voting opposition.
Regeneron Pharmaceuticals, Inc.
NASDAQ June 12
Regeneron’s executive compensation program has encountered substantial opposition from shareholders in recent years. At the last Say-on-Pay vote in 2017, approximately 67% of votes cast were in favor. This level of shareholder support is particularly noteworthy given that at the time roughly 36% of the company’s total voting power was held by company CEO Leonard Schleifer and large beneficial owner Sanofi. Excluding their support, the percentage of unaffiliated votes cast in favor of the say-on-pay proposal was significantly lower than the overall result.
With another Say-on-Pay on the AGM agenda for 2020, the company has taken steps to engage with its investors and make some adjustments, such as reducing executive and director compensation levels and improving disclosure. However, the program still includes structural lightning rods for shareholder concern, such as gross up provisions, along with a significant level of discretion within the STI plan. With the company’s performance largely flat over the past few years, unaffiliated investors will have to consider whether the compensation committee has been suitably responsible in aligning pay outcomes with shareholder expectations — and returns.
Euronext Paris June 9
Worldline is holding its shareholder meeting in the midst of a friendly tender offer for all of Ingenico’s shares. While the proposed acquisition is relatively ambitious in scale, and awkwardly timed given the state of the market, shareholders may take some degree of comfort Worldline’s recent track record. In particular, the company notes that its integration of SIX Payments Services, which was acquired in November 2018 for approximately €2.4 billion, has been successful and ahead of schedule. There has been some back and forth over the terms of the deal, which include several offers comprising different mixes of cash and shares. In late February, the offer was revised to account for an Ingenico dividend payment that was ultimately scrapped in the wake of COVID-19.
If it goes through, the resulting combined company would immediately become the fourth-largest global payment service provider by total revenue. The combined company is also expected to be the top merchant service provider, the top payment processor and among the top 3 online payment acceptance providers in Europe. And it appears that it will truly be a combined company, with Worldline’s CEO staying in that role, and Ingenico’s chair retaining that position on the new board. Shareholders will vote on the new nominees, as well as a series of article amendments related to the acquisition.
New York Stock Exchange June 5
NOTE: After we featured Credicorp’s AGM in March, the meeting was postponed until June. It’s still worth a look.
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.
In light of the dynamic nature of the ongoing crisis, we have compiled additional resources to help navigate the proxy season, including: