Bristol-Myers Squibb 2021 annual meeting is May 4, 2021, at 7:00 AM Pacific. To attend, vote, and submit questions during the Annual Meeting visit www.virtualshareholdermeeting.com/BMY2021 and enter your 16-digit control number. With my broker (TD Ameritrade), the only place I can find that control number is in a “vote now!” email I received long ago. If you deleted a similar email, you can still attend as a guest but you will not be able to vote or ask questions. Save those emails! I recommend voting in advance. To enhance long-term value. Vote AGAINST Samuels, Arduini, Storch, Vousden, pay, stock plan, and auditor. Vote FOR Special Shareholder Meetings 15%, Independent Board Chair, Written Consent, and Special Shareholder Meetings 10%.
Bristol-Myers Squibb (BMY) discovers, develops, licenses, manufactures, and markets biopharmaceutical products worldwide. Most shareholders do not vote. Reading through 100+ proxy pages takes too much time for most but your vote could be crucial. Below, how I voted and why.
If you have read these posts related to my portfolio and proxy proposals for the last 25 years and trust my judgment, skip the 9 minutes of reading. See how I voted my ballot. Voting will take you only a minute or two. Every vote counts.
Bristol-Myers Squibb 2021: ISS & Sustainalytics Ratings
From the Yahoo Finance profile page: Bristol-Myers Squibb Company’s ISS Governance QualityScore as of April 1, 2021, is 5. The pillar scores are Audit: 3; Board: 5; Shareholder Rights: 5; Compensation: 6.
Bristol-Myers Squibb 2021: Board Proposals
Egan-Jones Proxy Services recommends against Peter J. Arduini, Gerald L. Storch, and Karen H. Vousden because they serve on the compensation committee, and E-J finds pay issues. I agree. However, although he is rotating off the compensation committee, Theodore R. Samuels was on that committee when they recommended the problematic pay.
Vote: AGAINST Theodore R. Samuels, Peter J. Arduini, Gerald L. Storch, and Karen H. Vousden.
2. Executive Compensation
Bristol-Myers Squibb’s Summary Compensation Table shows the highest paid named executive officer (NEO) was CEO/Chair Giovanni Caforio, M.D. at $20M. I’m using Yahoo! Finance to determine their market cap ($140B). I define large-cap as $10B, mid-cap as $2-10B, and small-cap as less than $2B. Bristol-Myers Squibb is a large-cap company.
According to MyLogIQ, the median CEO compensation at large-cap corporations was $13M in 2020. $20M is substantially above that amount. Bristol-Myers Squibb’s shares barely outperformed the S&P 500 during the most recent two-year time period. However, it substantially underperformed during the most recent one- and five-year time periods. The ratio of the annual total compensation of the CEO to the median of the annual total compensation of all employees was 137:1.
Egan-Jones Proxy Services recommended the board more closely align pay with performance. They should “work to reduce the cost of any similar plan that may be proposed in the future.” They recommend voting Against it. Given my concern for the growing wealth disparity, poor performance, and E-J recommendation, I agree.
3. Bristol-Myers Squibb 2021 Stock Award and Incentive Plan
After taking into account the equity dilution and other measures, Egan-Jones recommends Against. The board should align CEO pay more closely with company performance. Work to reduce the cost of any similar plan proposed in the future.
4. Ratification of Independent Auditor
I have no reason to believe the auditor engaged in poor accounting practices or has a conflict of interest. Egan-Jones recommends voting against the auditor if they served for seven years. Independence becomes compromised by that time. Deloitte & Touche, LLP served more than seven years. No other issues appear significant
5. Special Shareholder Meetings 15%
The Board believes a 15% threshold strikes an appropriate balance between enhancing shareholder access and minimizing the potential harms. Egan-Jones believes such thresholds should be no lower than 25%. I disagree. 15% is a good compromise up from the 10% often requested by shareholders. Keep in mind that 15% to 20% of shares do not get voted because shareholders do not take the time to vote. That shrinks the pool of likely participants. The Board may have introduced this proposal to dissuade shareholders from voting for my proposal (below) to provide for written consent. However, as I discuss below, special meeting rights do not alleviate the need for written consent.
Bristol-Myers Squibb 2021: Shareholder Proposals
6. Independent Board Chairman
This proposal comes from The Sisters of St. Francis of Philadelphia and other co-filers. There is a potential conflict of interest for a CEO to have a past CEO an inside director act as Chair. Egan-Jones agrees and so do I.
7. Right to Act by Written Consent
This good corporate governance proposal comes from me, James McRitchie, so of course I voted FOR. Egan-Jones also recommends For. Last year, my similar proposal won the support of 43.5%.
Many boards and investors assume a false equivalency between rights of written consent and special meetings. However, any shareholder, regardless how many (or few) shares she owns, can seek to solicit written consents on a proposal.
By contrast, calling a special meeting may require a two-step process. A shareholder who does not own the minimum shares required must first obtain the support of other shareholders. Once that meeting is called, the shareholder must distribute proxies asking shareholders to vote on the proposal to be presented at the special meeting. This two-step process can take more time and expense than the one-step process of soliciting written consents.
8. Special Shareholder Meetings 10%
This good corporate governance proposal comes from Kenneth Steiner. Again, Egan-Jones believes such thresholds should be no lower than 25%. Even at the 10% threshold, special meetings would be rare and would only be called in a crisis.
Proxy Insight reported no votes in advance of the meeting when I last checked.
In looking up a few funds in our Shareowner Action Handbook, I see Australia’s Local Government Super voted For all except written consent and 10% threshold for special meetings. Calvert voted Against Caforio and the auditor; For all other items. Norges voted Against Bonney, Caforio, and #8. Trillium voted Against all Board items, except #5; For all shareholder proposals.
- Directors: AGAINST Samuels, Arduini, Storch, and Vousden.
- Executive Compensation: AGAINST
- Stock Award and Incentive Plan: AGAINST
- Auditor: AGAINST
- Special Shareholder Meetings 15%: FOR
- Independent Board Chairman: FOR
- Written Consent: FOR
- Special Shareholder Meetings 10%: FOR
Bristol-Myers Squibb 2021: Issues for Future Proposals
Looking at insightia for anti-shareholder provisions: +++
- No requirement to separate CEO and Chair
- Supermajority requirements
Bristol-Myers Squibb 2022: Mark Your Calendar
Shareholder proposals relating to our 2022 Annual Meeting of Shareholders must be received at Bristol-Myers Squibb Company, 430 East 29th Street—14th Floor, New York, New York 10016, Attention: Corporate Secretary, no later than November 25, 2021. Such proposals must comply with SEC regulations under Rule 14a-8 regarding the inclusion of shareholder proposals in company sponsored proxy materials. Shareholders are encouraged to contact the Office of the Corporate Secretary prior to submitting a shareholder proposal or any time they have a concern. At the direction of the Board of Directors, the Office of the Corporate Secretary acts as corporate governance liaison to shareholders.
Be sure to vote for each item on the proxy. Any items left blank get automatically 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.” Peer groups are often chosen by aspiration. The “Lake Woebegone effect” may be nice in fictional towns, “where all the children are above average.” However, corporations live in the real world. All CEOs are above average. Ignoring that fact partly explains why their collective pay spiraling out of control. We need to slow the pace of money going to the 1% or our economy will fail to serve the majority. The rationale for peer group benchmarking is a mythological market for CEOs. For more on the subject, see CEO Pay Machine Destroying America.