Important highlights from upcoming meetings, provided by Glass Lewis’ global research team:
Bezeq The Israel Telecommunication Corp. Ltd.
Tel-Aviv Stock Exchange May 14
Bezeq’s 2018 AGM was a watershed moment for the company and quite possibly for Israeli governance standards as a whole. The meeting was the first to involve a foreign activist foray into one of Israel’s stock market giants, sparking a united campaign by institutional shareholders upset at alleged minority shareholder expropriation by a 26% “controlling” shareholder.
This year’s meeting looks set to be similarly dramatic, if somewhat more technical. That “controlling” shareholder, B Communications (“BCom”), has new ownership, and has submitted two proposals to the AGM agenda. One seeks to put an additional BCom-nominated director on the board, pushing their level of representation above their ownership. The other proposal appears highly technical – article amendments in accordance with the company’s “Control Permit”, a vestigial regulatory requirement that reflects Bezeq’s former status as a state-run monopoly and essential service provider – but marks the latest skirmish in the battle for control.
Far from waving the amendments through as a formality, the members of the Bezeq board — most of whom were elected in 2018 with explicit endorsement from institutional shareholders to be the antidote to the alleged exploitation by BCom’s former owners — rebuffed the proposal on the grounds that it mainly serves the interests of the dominant shareholder (and the government ministry) and doesn’t benefit the company or the rest of its shareholders.
Considering that they are essentially faced with a choice between overruling an independent board or opposing a government ministry, and considering that many still bear scars of long-term value depreciation to which the former controllers led them in the last decade, dispersed minority shareholders voting at this meeting may feel cast between a rock and a hard place. But with Israel potentially eyeing up a fourth round of elections in just more than a year, at least the realm of shareholder politics is doing its best to imitate the national reality.
R.R. Donnelley & Sons Company
New York Stock Exchange May 14
It’s hard to believe but summer is just around the corner. Last year, marketing and comms provider RR Donnelley spent its dog days being pursued by Chatham Asset Management, which built up a 10% stake over July and August. However, the interest wasn’t exactly reciprocated, as Donnelley’s board responded by adopting a shareholder rights plan. The exact terms are a bone of contention: Chatham claims that the poison pill has “deterred” them from engaging with the board, while the board maintains that the plan “does not preclude … uninhibited discussions with management.”
Either way, it does not appear that discussions between the two parties have moved beyond letter writing in the past year. Under normal circumstances, the stage would be set for a potentially awkward AGM showdown – but these aren’t normal circumstances, and the company has announced that the meeting will be held in a virtual-only format. As such, it will be interesting to see whether the format allows Chatham the opportunity to make its case.
Uber Technologies, Inc.
New York Stock Exchange May 11
Since its IPO last April, Uber has had trouble getting up to speed. The share price is down, and concerns have lingered over the company’s governance, corporate culture, and relationship with its employees-cum-contractors.
CtW Investment Group, which works with pension funds sponsored by affiliates of unions, brought governance concerns to the fore in mid-April when it filed an exempt solicitation letter urging shareholders to vote against nominee John Thain along with the company’s say-on-pay proposal. CtW characterizes Thain as a “holdover of the Travis Kalanick era” with questionable business judgement, and raises concerns about his relationship with CFO Nelson Chai. On the pay front, shareholders will have to consider extremely generous one-time awards, including a $27 million equity grant for CEO Dara Khosrowshahi, along with an ongoing program where annual bonus awards are largely discretionary, with no clear performance formula.
To be fair, unlike many other tech startups Uber does not have a dual-class share structure or classified board, and shareholders are empowered to amend bylaws or the composition of the board – however, they don’t have the right to call a special meeting or act by written consent, and an exclusive forum provision is in place.
New York Stock Exchange May 12
Long known for its habit of acquiring competing (or indirectly adjacent) companies, HP will hold its upcoming AGM in the shadow of an unsolicited tender offer that was recently withdrawn by Xerox Holdings Corporation. Back in November 2019, Xerox (which, coincidentally, is 11% owned by Carl Icahn) offered a total of $22 per share in a mix of cash and stock. The board unanimously rejected the 29% premium but appeared open to further discussions. Talks continued through the end of January, when Icah—ahem, Xerox announced its intent to nominate eleven candidates to HP’s board. The threat prompted HP’s board to adopt a shareholder rights plan or, poison pill, and announce a new strategic financial and value creation plan that included increasing its share repurchase authorization program from $5 billion to $15 billion.
And then covid took hold. Citing the pandemic, Xerox postponed its campaign in mid-March and ultimately withdrew its tender offer. As such, it’s unclear just how receptive Icahn and Xerox would have been to the board’s value creation plan, and what lies ahead. Shareholders are likely to have questions for the board regarding their conduct during the negotiations – and their future plans for the poison pill that was implemented without shareholder approval. Also on the agenda is a shareholder proposal that would give shareholders the right to act by written consent.
XPO Logistics, Inc.
New York Stock Exchange May 14
At XPO’s upcoming AGM, shareholders will be voting on several issues directly related to human capital management-related issues at the firm – issues that have come under increased scrutiny at the company in recent years.
XPO has received backlash for alleged gender bias issues, which were highlighted in a 2018 New York Times report. Specifically, the article exposed the experiences of a number of women who had experienced miscarriages at XPO’s Memphis warehouse, citing the firm’s refusal to modify work for pregnant employees. According to the report, six women miscarried at the warehouse after having asked for lighter duty. Prior to the publication of the article, eight women had filed charges with the EEOC accusing nine named supervisors at the same Memphis warehouse of sexual harassment and retaliation, alleging incidents occurring between October 2014 and March 2018. Following a Congressional investigation, the warehouse was ultimately closed.
Partly in response to these issues, the New York State Comptroller is requesting that XPO report on whether (and how) it plans to integrate ESG metrics into performance measures for executive compensation. The firm’s compensation structure has been criticized for years, while its management of compensation-related issues has also caused recent investor concern; in 2019, XPO’s say on pay proposal received the support of less than 67% of shareholders.
Another proposal on the ballot from The Service Employees International Union Pension Plans Master Trust is requesting that the firm prepare a report regarding ways to strengthen prevention of sexual harassment and align senior executive compensation incentives. A similar proposal was on the ballot in 2019 and received roughly 18% support, excluding abstentions and broker non-votes.
Just Eat Takeaway.com NV
Euronext Amsterdam May 14
With going out for dinner not on the table across many European markets, Just Eat and Takeaway picked a good time to combine into a food delivery juggernaut. However, the merger hasn’t gone down entirely smooth. Shortly after it was approved in January, the UK Competition and Markets Authority issued an Initial Enforcement Order, forcing the two entities to continue to be run independently and under separate management until the CMA’s further decision. The CMA cleared the transaction on April 23, 2020, just 3 weeks ahead of the AGM, however some shareholders may still have questions about the combined entity
Ford Motor Company
New York Stock Exchange May 14
The agenda for this year’s upcoming Ford’s AGM includes two proposals requisitioned by shareholders. The first proposal is a resubmission from John Chevedden, who is asking the firm to switch from a dual-class to single-class share structure. Second, the Comptroller of the City of New York and the Unitarian Universalist Association request that Ford annually report on its direct and indirect lobbying. While Ford provides some disclosure pertaining to its direct and indirect political spending and maintains a corporate political spending policy, it does not explicitly provide board-level oversight of such spending. Proposals of this type are among the most common shareholder proposals to go to a vote each year. This specific proposal, which was submitted to Ford in 2019 by Climate Action 100+, comes in the wake of an initiative from the group, which represents $34 trillion in AUM, asking companies to align their lobbying with the goals of the Paris Agreement.
In light of the dynamic nature of the ongoing crisis, we have compiled additional resources to help navigate the proxy season, including:
- a tracker collecting all shareholder meetings that have been delayed or postponed; and
- a market-by-market roundup of the impact on proxy voting. The most recent updates are below; for the full roundup, see our blog post.
Legislative act on Measures to Treat COVID-19 Pandemic and Other Urgent Provisions of March 30, 2020 gives Greek companies a power to delay publishing financial statements for the 2019 financial year beyond the statutory deadline, i.e. until June 30, 2020. In addition, pursuant to the provisions of the Act on Urgent Measures to Address Consequences of the Risk of dispersal of COVID-19, to Support Society and Entrepreneurship and to Ensure Smooth Operation of the Market and Public Administration, general meetings of shareholders may be held in hybrid or virtual-only format. This authorisation is also valid until June 30, 2020.
As a result of the nationwide state of emergency declared in April 2020, Japanese companies have already begun to delay their financial reports. Travel restrictions have made it difficult for auditors to complete their work, and companies have faced additional obstacles to accurately gathering financial information. Furthermore, a small number of companies have also delayed their annual general meeting as a result of COVID 19.
Tokyo Stock Exchange rules normally require companies to disclose their full year results within a period of 45 days from the end of their financial year. However, taking into account the impact of COVID 19, this deadline has been removed, with the disclosure to be accepted whenever they are settled. Any company which is expected to experience a significant delay is requested to consider disclosing that information in a timely manner.
Similarly, the current Financial Instruments and Exchange Act state that companies must submit their periodical financial statement report within three months of the end of their fiscal year. However, given the difficulty of gathering accurate financial information, the Financial Services Agency will revise the Financial Instruments and Exchange Act to allow for the submission of corporate securities reports to be extended to the end of September.
Companies in Japan are also considering the possibility of holding hybrid annual general meetings. This structure would allow shareholders to participate electronically in conjunction with a physical meeting. While the current corporate law requires companies to set a physical venue for a meeting, on February 26, 2020, the Ministry of Economy, Trade and Industry (“METI”) released guidance that a hybrid meeting structure was permissible. Further, on April 2, METI, together with the Ministry of Justice, released guidance that companies may restrict the number of shareholders in attendance at a physical meeting, and may in fact host a meeting without any shareholders being physically present.
Companies in Japan are legally required to disclose their notice of meeting a minimum of 14 days before the meeting date. In recent years there has been an increase in companies which have chosen to disclose their notice of meeting earlier than this legally required deadline, which provides shareholders with additional time to consider their voting options. However, given the dynamic situation resulting from COVID 19, it is possible that this year will see an increase in the number of companies disclosing only 14 days in advance.
Under normal circumstances, shareholders meetings in Mexico must be held in-person, at the Company’s registered office. There are, however, two exceptions to this rule: 1. If the Company’s Bylaws foresees the possibility of a resolution being adopted outside the in-person meeting, in writing, by the majority of the Company’s shareholders; and 2. In case of extraordinary events/ force majeure, according to article 179 of the Ley General de Sociedades Mercantiles, such as the COVID-19 pandemic.
In spite of the law’s apparent authorization, Mexican companies seemed to have preferred to hold their meetings with the presence of a limited number of shareholders, following the WHO safety guidelines in light of the pandemic. This might be due to the fact that the validity of the virtual meetings could have been contested, given the in-person nature of said meetings in Mexico.
On April 09, 2020, the Mexican Securities Exchange Commission (Comisión Nacional Bancaria y de Valores , “CNBV”) issued a letter extending the date of certain periodical reporting obligations for Mexican companies listed on the Mexican Stock Exchange (Bolsa Mexicana de Valores or “BMV”). This includes the following:
- Annual information: Original deadline: the 3rd day following the day on which the AGM took place. Extended to July 8, 2020.
- Reports (Issuers of shares or credit instruments): Original deadline: June 30. Report on (i) the relevant directors and executives of the Issuer that holds more than 1%; (ii) natural or legal persons, trusts and other investment vehicles, who are direct or indirect beneficiaries of 5% or more of the Issuer’s stock capital; and (ii) the 10 shareholders with the largest direct ownership. Extended to September 1, 2020.
- Annual report: Original deadline: 30 April. Extended to July 3, 2020.
- Quarterly information: Original deadline: April 20, 2020. Extended to July 3, 2020.
The Peruvian government declared a national state of emergency in response to the COVID-19 pandemic from March 15, 2020, until May 10, 2020, with possible extensions. Said state of emergency prohibits large gatherings, which prevents companies from holding in-person AGMs. As a result, the majority of the Peruvian companies have decided to postpone their AGMs to a date after the end of the state of emergency, while a small number of companies have decided to hold virtual meetings.
The Peruvian Securities and Exchange Commission (Superintendencia del Mercado de Valores – “SMV”) issued a letter providing conditional relief to companies that are unable to comply with their filings obligations during the state of emergency, which includes the presentation of financial statements and the annual report. Once said state is over, the SMV will establish new deadlines for the presentation of the aforementioned documents.