SciClone Pharmaceuticals

SciClone Pharmaceuticals Proxy Voting Guide

SciClone Pharmaceuticals Proxy Voting Guide by SciClone Pharmaceuticals, Inc. (SCLN), a specialty pharmaceutical company, provides therapies for oncology, infectious diseases, and cardiovascular disorders in the People’s Republic of China, the United States. SciClone Pharmaceuticals is one of the stocks in my portfolio. had collected the votes of no fund families when I checked and voted. Their annual meeting is coming up on June 8, 2017.SciClone Pharmaceuticals

SciClone PharmaceuticalsI voted FOR #5 proxy access, proposed by me, James McRitchie. See how and why I voted this and other items below. I voted with the Board’s recommendations 80% of the time. View proxy 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.

SciClone Pharmaceuticals: ISS Rating

From the Yahoo Finance profile:

SciClone Pharmaceuticals, Inc.’s ISS Governance QualityScore as of May 1, 2017 is 1. The pillar scores are Audit: 10; Board: 1; Shareholder Rights: 1; Compensation: 3. 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: Audit.

SciClone Pharmaceuticals: Compensation

SciClone Pharmaceuticals’ Summary Compensation Table (p. 35) shows the highest paid named executive officer (NEO) was CEO Friedhelm Blobel, Ph.D. at $2.3M in 2016. I am using Yahoo! Finance to determine the market cap ($500M) and I am roughly defining large-cap as $10B, mid-cap as $2-10B, and small-cap as less than $2B. SciClone Pharmaceuticals is a small-cap company. According to EY Center for Board Matters, the 3-yr average CEO compensation at small-cap corporations is $3.4M in 2016, so pay was well below that amount. SciClone Pharmaceuticals’ shares underperformed the S&P 500 over the most recent one, two, and five year time periods, outperforming only over ten years. Is it worth keeping?

Egan-Jones Proxy Services takes various measures to arrive at a proprietary rating compensation score, which measure wealth creation in comparison to other widely held issuers.

SciClone Pharmaceuticals earned a compensation score of “Good:”

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 agreed and voted “For” the say-on-pay item.

SciClone Pharmaceuticals: 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. Egan-Jones recommends For. I agreed.

SciClone Pharmaceuticals: Board Proposals

Egan-Jones recommended against two directors:

We recommend that clients WITHHOLD votes from the Company’s Chairman, Jon S. Saxe for holding more than one other public directorship. We believe that the Chairman, being responsible for the leadership of the Board and the creation of the conditions necessary for overall board and individual director effectiveness, should hold no more than one other public directorship to ensure the valuable and prudent exercise of his fiduciary duties as a Chairman and that his/her integrity and efficiency are not compromised.

In addition, we recommend that clients WITHHOLD votes from Affiliated outside director Richard J. Hawkins, current member of the Audit, Compensation and Nominating committees; and Affiliated outside director Jon S. Saxe, current member of the Audit and Nominating committees of the Board. We believe that key Board committees namely Audit, Compensation and Nominating committees should be comprised solely of Independent outside directors for sound corporate governance practice.

I’m not quite ready to go there on the Chairman but did vote against Hawkins.

SciClone Pharmaceuticals: Shareholder Proposal on Proxy Access

#5, Amend Proxy Access Right (McRitchie) Yes, once I submitted our proxy access proposal, the board adopted a ‘lite’ version, which limits nominating groups to 20, instead of allowing groups of up to 50. The Council of Institutional Investors, whose members have over $3T in assets, says its members cannot meet the 3 year/3% threshold with a 20 members group. Since their members are mostly indexed, it may take 30 to 50 members to get there. Of course, retail investors may also need up to 50 to implement proxy access. Most of the real problems in corporate governance are at small-cap companies, where few institutional investors have positions. With a group limit of 20, can SciClone Pharmaceuticals really be considered to have proxy access. If it can’t be implemented, is it really a right?

Secondly, the Board’s proxy access ‘lite’ only provides up to 20% of the board, or 2 whichever is greater. My proposal allows shareholders to nominate up 25% of the board, or 2 whichever is greater. That makes no difference right now, but could if the board expands.

No one is invoking proxy access at this time, so it is important to get it right with a usable rule.

SciClone Pharmaceuticals: Votes Against Board Position in Bold Proxy Insight

As mentioned above, had collected the votes of only one fund when I voted.  Proxy Insight had collected additional votes votes from Calvert and Teachers Retirement System of Texas. Both funds voted For proposal #5. Calvert voted against the pay package.

1.1Elect Director Jon S. SaxeFor
1.2Elect Director Friedhelm BlobelFor
1.3Elect Director Nancy T. ChangFor
1.4Elect Director Richard J. HawkinsAgainst
1.5Elect Director Gregg A. LapointeFor
1.6Elect Director Simon LiFor
2Advisory Vote to Ratify Named Executive Officers’ CompensationFor
3Advisory Vote on Say on Pay FrequencyOne Year
4Ratify PricewaterhouseCoopers Zhong Tian LLP as AuditorsFor
5Amend Proxy Access RightFOR

SciClone Pharmaceuticals: Issue for Future Proposals

SharkRepellentLooking at for other provisions unfriendly to shareowners. The main outstanding issue is proxy access:

  • No action can be taken without a meeting by written consent.
  •  Special meetings can only be called by shareholders holding not less than 25% of the voting power.
  • Proxy access provision whereby a shareholder, or a group of up to 20 shareholders, holding at least 3% of the outstanding common stock for at least three years may nominate one director, so long as the number of directors elected via proxy access does not exceed the greater of two individuals or 20% of the board.

SciClone Pharmaceuticals: Mark Your Calendar


Stockholder proposals submitted for inclusion in our proxy materials for our 2018 Annual Meeting of Stockholders must be received by December 29, 2017. Stockholder nominations for director that are to be included in our proxy materials under the proxy access provision of our Bylaws must be received no earlier than November 29, 2017 and no later than the close of business on December 29, 2017. Stockholder nominations for director and other proposals that are not to be included in such materials must be received by December 29, 2017. Any such stockholder proposals or nominations for director must be submitted to our Corporate Secretary, SciClone Pharmaceuticals, Inc., 950 Tower Lane, Suite 900, Foster City, California 94404.


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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