Salesforce CRM

Salesforce CRM Adopts Special Meetings

Salesforce CRM Adopts Special Meetings provision for shareholders with 15 Percent Shares.

I am just circling back and can now ensure myself and readers that our 50.5% win on our 2017 proposal was implemented. See exhibit 3.1 and 3.2 of 8-K filing. We also expect to see action on our 2018 proposal to end supermajority provisions, which won over 80% of the vote in 2018.

As I wrote in 2017 about our special meeting proposal at Salesforce CRM:

Egan-Jones writes: “We do not believe it is appropriate to enable holders of below 25% of the common stock to have an unlimited ability to call special meetings for any purpose at any time. As such, we recommend a vote AGAINST this Proposal. Delaware law allows a 10% threshold to call a special meeting. My proposal for 15% seems a reasonable compromise.

My proposal should also be seen in context. shareholders currently have no right to call a special meeting. We have no right to written consent. Changing many of the bylaws requires a vote of 67%. In comparison, 63% of large-cap companies provide a right to call special meetings. The vote is advisory, so the Board could adopt a threshold of 20%, if they believe 15% is too low.

And in 2018 re supermajority proposal at Salesforce CRM:

It is simple good governance, requesting our board take each step necessary so that each voting requirement in our charter and bylaws that calls for a greater than simple majority vote be eliminated, and replaced by a requirement for a majority of the votes cast for and against applicable proposals, or a simple majority in compliance with applicable laws.

The Board of Salesforce argues the following items should require a 2/3 vote: (i) removal of any or all directors; (ii) adoption, amendment or repeal of the Company’s bylaws; and (iii) an amendment to certain provisions in the Company’s certificate of incorporation. I disagree and so do many companies. For example, only 16% of companies require a supermajority to remove directors.

The Council of Institutional Investors has the following policy:  “A majority vote of common shares outstanding should be sufficient to amend company bylaws or take other action that requires or receives a shareowner vote.”

Egan-Jones: “We believe that the advantages of eliminating supermajority provisions outweigh the benefits of maintaining it as a voting standard. We believe that a simple majority vote will strengthen the Company’s corporate governance practice. Contrary to supermajority voting, a simple majority standard will give the shareholders equal and fair representation in the Company by limiting the power of shareholders who own a large stake in the entity, therefore, paving way for a more meaningful voting outcome.”

Salesforce CRM is a great company, one of the better performers in our portfolio. It is #1 on Fortune’s 100 best companies to work for list and it meets Larry Fink’s important investment criteria:

To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.

It is nice to see Salesforce CRM move forward in strengthening corporate governance provisions.


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