Twitter Proxy Voting Guide by CorpGov.net. Twitter, Inc. operates as a global platform for public self-expression and conversation in real-time. The company offers various products and services, including Twitter which allows users to create, distribute, and discover content; and Periscope, a mobile application that enables users to broadcast and watch videos live with others. Twitter is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of one fund family when I checked and voted. Their annual meeting is coming up on May 22, 2017. I will be in attendance, presenting our proposal to study cooperatives, so stop by and say hello.
Of course I voted FOR our proposal entitled Exit to Democratic Ownership, filed in conjunction with BuyTwitter.org. Add to the collective intelligence by tweeting #WeAreTwitter. Follow @BuyThisPlatform. See how and why I voted this and other items below. I voted with the Board’s recommendations 43% of the time. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A).
Read Warnings below. What follows are my recommendations on how to vote the proxy in order to enhance corporate governance and long-term value.
Twitter Proxy Voting Guide: ISS Rating
From the Yahoo Finance profile: Twitter, Inc.’s ISS Governance QualityScore as of May 1, 2017 is 9. The pillar scores are Audit: 2; Board: 5; Shareholder Rights: 8; Compensation: 10. Brought to us by Institutional Shareholder Services (ISS). Scores range from “1” (low governance risk) to “10” (higher governance risk). Each of the pillar scores for Audit, Board, Shareholder Rights and Compensation, are based on specific company disclosures. That gives us a quick idea of where to focus: the Shareholder Rights and Compensation.
Twitter Proxy Voting Guide: Compensation
Twitter’s Summary Compensation Table shows the highest-paid named executive officer (NEO) was COO and CFO Anthony Noto at $23.8M in 2016. I am using Yahoo! Finance to determine the market cap ($13.5B) and I am roughly defining large-cap as $10B, mid-cap as $2-10B, and small-cap as less than $2B. Twitter is a large-cap company. According to the Equilar Top 25 Executive Compensation Survey 2015, the median CEO compensation at large-cap corporations was $10.3M in 2015, so pay was well above that amount. Twitter shares outperformed the NASDAQ over the most recent one-year period but underperformed in the most recent two, and five-year time periods.
Egan-Jones Proxy Services takes various measures to arrive at a proprietary rating compensation score, which measures wealth creation in comparison to other widely held issuers.
Twitter earned a compensation score of “Neutral,”
We believe that shareholders should support the current compensation policies put in place by the Company’s directors. Furthermore, we believe that the Company’s compensation policies and procedures are centered on a competitive pay-for-performance culture, strongly aligned with the long-term interest of its shareholders and necessary to attract and retain experienced, highly qualified executives critical to the Company’s long-term success and the enhancement of shareholder value. Therefore, we recommend a vote FOR this Proposal.
I voted “AGAINST” the say-on-pay item. The “Lake Woebegone effect,” where everyone is above average and the averages are recalculated upward every year, has to stop. We cannot just keep voting in favor of higher and higher pay packages. I would have also voted against all the compensation committee members. However, because of Twitter’s classified board and staggered terms, I would only vote against committee members Taylor and Scardino.
Twitter Proxy Voting Guide: Accounting
I have no reason to believe the auditor has rendered an inaccurate opinion, is engaged in poor accounting practices or has a conflict of interest. However, Egan-Jones recommends voting against it, favoring auditor rotation after seven years. I am not quite ready to set that as the bar, so voted FOR.
Twitter Proxy Voting Guide: Board Proposals
As mentioned above, I voted “Against” the pay package. As is my habit, when I vote against the pay package, I also vote against the compensation committee.
Egan-Jones recommended:
In the future, we recommend that clients withhold votes from Inside director Jack Dorsey if he continues to hold more than one other public directorship. We believe that the CEO, being the most critical role in a company, should hold no more than one other public directorship to ensure the effective and prudent exercise of his fiduciary duties as a CEO and that his integrity and efficiency are not compromised.
That seems like excellent advice.
Twitter Proxy Voting Guide: Shareholder Proposals
#4 Exit to Democratic Ownership
The only shareholder proposal included in the proxy was co-filed by James McRitchie (me) and Steffen Sauerteig (from Germany) as part of a worldwide movement to save Twitter from losing sight of its mission and being turned into another democratic-free zone. Join us at BuyTwitter.org. Add to the collective intelligence by tweeting #WeAreTwitter. Follow @BuyThisPlatform.
Twitter’s noble mission is very connected to democracy.
To give everyone the power to create and share ideas and information instantly, without barriers.
Our company is helping to spread First Amendment rights around the world. Access to information and the exercise of free speech are key to government “by and for the people.” However, Twitter is in trouble. A thousand dollars invested in Twitter at IPO is now worth about $540, whereas the same amount invested the Nasdaq is worth about $1570. With 330 million users sending a billion tweets every few days, our company should do better. Shareholders, employees, and users are frustrated that Twitter is not performing up to its potential.
Cooperatives, typically owned by their users or employees, also have roots in promoting democracy. According to the consulting firm McKinsey, cooperatives perform substantially better at growing market share than publicly traded companies. When customers are owners, companies are more in touch with customer needs. When employees are owners, they are more incentivized to collaborate and push new ideas.
Giving Twitter users and employees a louder voice through ownership and representation on the Board could accelerate growth to outpace other social media companies.
This proposal simply asks for a study to explore options. Those options could range from reincorporating the whole company as a cooperative to selling preferred shares to users and setting up an employee stock ownership plan (ESOP) for employees, allowing both groups to elect representatives to the Board.
Let us explore the potential of empowering Twitter users and employees “to create and share ideas and information instantly, without barriers,” by giving us a real voice in how Twitter is governed. The cost of a study is minor; the potential gains are phenomenal. Vote to study cooperative models and their possible applicability to Twitter; vote FOR proposal #4.
Twitter Proxy Voting Guide: How I Voted (Votes Against Board Position in Bold
As mentioned above, ProxyDemocracy.org had collected the votes of four funds when I voted. Proxy Insight reported additional votes from Canada Pension (CPPIB), the Teacher Retirement System of Texas (TRS), and others. Unfortunately, they voted like Calvert. #4 is a new proxy subject, so none of the funds had guidance on the topic in the proxy voting guidelines.
| # | PROPOSAL TEXT | CorpGov | CALVERT |
|---|---|---|---|
| 1.1 | Elect Director Omid R. Kordestani | For | For |
| 1.2 | Elect Director Marjorie Scardino | Against | For |
| 1.3 | Elect Director Bret Taylor | Against | For |
| 2 | Ratify Named Executive Officers’ Compensation | Against | For |
| 3 | Ratify PricewaterhouseCoopers LLP as Auditors | For | For |
| 4 | Exit to Democratic User Ownership | For | Against |
Twitter Proxy Voting Guide: Issue for Future Proposals
Looking at SharkRepellent.net for other provisions unfriendly to shareowners. There are several major issues to just bring Twitter up to conventional corporate governance norms:
- Classified board with staggered terms.
- No action can be taken without a meeting by written consent.
- Shareholders cannot call special meetings.
- Supermajority vote requirement (80%) to amend certain charter and all bylaw provisions.
- No proxy access provisions.
Twitter Proxy Voting Guide: Mark Your Calendar
Stockholders may present proper proposals for inclusion in our proxy statement and for consideration at next year’s annual meeting of stockholders by submitting their proposals in writing to our Secretary in a timely manner. For a stockholder proposal to be considered for inclusion in our proxy statement for our 2018 annual meeting of stockholders, our Secretary must receive the written proposal at our principal executive offices not later than December 8, 2017. In addition, stockholder proposals must comply with the requirements of Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Stockholder proposals should be addressed to: Twitter, Inc., Attention: Secretary, 1355 Market Street, Suite 900, San Francisco, California 94103
Twitter Proxy Voting Guide: Related Posts
- Board Seats for Franchisees: Democratic Paradigm
- BuyThisPlatform: Twitter Explores Co-op Capitalism
- A More Cooperative Based Twitter
Warnings
Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime).I generally vote against pay packages where NEOs were paid above median in the previous year but make exceptions if warranted. According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay), aggregate compensation by public companies to NEOs increased from 5 percent of earnings in 1993-1995 to about 10 percent in 2001-2003.
Few firms admit to having average executives. They generally set compensation at above average for their “peer group,” which is often chosen aspirationally. While the “Lake Woebegone effect” may be nice in fictional towns, “where all the children are above average,” it doesn’t work well for society to have all CEOs considered above average, with their collective pay spiraling out of control. We need to slow the pace of money going to the 1% if our economy is not to become third world. The rationale for peer group benchmarking is a mythological market for CEOs.
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