I have been using Egan-Jones Proxy Services (“EJPS”) for several months to help me decide how to vote my proxies and have come to value their advice. For example, I like their policy of withholding votes from the entire compensation committee when voting against say on pay.
Recently Egan-Jones announced the implementation of changes to their proxy voting guidelines for the 2017 Proxy Season. I like the direction they are going.
Key updates for this year’s upcoming proxy season include:
- Over-boarding – Egan-Jones will expand its strictest over-boarding threshold to Chairmen who are not CEOs in addition to the current inclusion of CEOs. This requirement means that both Board Chairmen and CEOs will receive a WITHHOLD recommendation if they hold more than one outside public directorship.
- Board Member Tenure and Independence – They have decided to take a more conservative approach to the independence of Board members with a long tenure at a firm. Recognizing that at a certain point a long tenured Board member can no longer be considered fully “independent” they will classify Directors with ten or more years on the Board as “affiliated outside director.” Note that since they only recommend support of directors who are fully independent for membership in key Board committees and any non-independent director on such a committee will receive a recommendation of WITHHOLD.
- Auditor Ratification – Egan-Jones will apply stricter requirements to all Guidelines including a requirement for auditor rotation and rate firms based upon the relative size of the auditor payments as compared to other firms and the disciplinary history of the auditor chosen. A poor rating result will generally result in Egan-Jones not supporting ratification of that auditor.