Biogen 2021 Lobbying

Biogen 2021 Proxy: Lobbying

Biogen 2021 annual meeting is June 2, 6 AM Pacific Time. To attend, vote, and submit questions during the Annual Meeting visit here. You will need your 16-digit control number. I recommend voting in advance. Enhance long-term value. Vote AGAINST Auditor, Pay, all directors except Mantas. Vote For: Forum Selection, Reports on Lobbying, Gender Pay Gap.

Biogen Inc. discovers, develops, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases worldwide. Most shareholders do not vote.  Reading through 76 pages of the proxy takes time 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 8 minutes of reading. See how I voted my ballot. Voting will take you only a minute or two. Every vote counts.

I voted with the Board’s recommendations 11% 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.

Biogen 2021: ISS & Sustainalytics Ratings

From the Yahoo Finance profile page. Biogen Inc.’s ISS Governance Quality Score as of April 30, 2021, is 5. The pillar scores are Audit: 1; Board: 6; Shareholder Rights: 2; Compensation: 9.

Corporate governance scores courtesy of Institutional Shareholder Services (ISS). Scores indicate decile rank relative to index or region. A decile score of 1 indicates lower governance risk, while a 10 indicates higher governance risk. We need to pay close attention to Board and Compensation.
Sustainalytics’ rates Biogen’s ESG score about the same as its peers, moderate controversy level

Biogen 2021: Board Proposals

1. Directors

Since I voted against Pay, I voted against members of the compensation committee: Richard C. Mulligan and Brian S. Posner. Because they have served for more than 10 years, I also voted Against Denner, Dorsa, Leaming, Mulligan, Papadopoulos, Posner, Rowinsky, and Sherwin.

I am concerned with the low proportion of women and minority board members and considered voting against governance committee members. However, I had already committed to voting against most for the above reasons. The one additional member was Mantas. Since his bio emphasizes his role of “advocating for diversity and developing talent in multi-cultural environments,” I gave him a pass this year.

Vote: AGAINST Denner, Dorsa, Leaming, Mulligan, Papadopoulos, Posner, Rowinsky, and Sherwin.

2. 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. PricewaterhouseCoopers LLP has served for 18 years years. No other issues appear significant


3. Executive Compensation

Biogen’s Summary Compensation Table shows the highest paid named executive officer (NEO) was CEO Michel Vounatsos at $18.7 M. I’m using Yahoo! Finance to determine market cap ($41.8B) and I define large-cap as $10B, mid-cap as $2-10B, and small-cap as less than $2B. Biogen is a large-cap company.mylogiq_logo

According to MyLogIQ, the median CEO compensation at large-cap corporations was $12.9M in 2020. CEO Michel Vounatsos at  $18.7M is paid above that amount.  Biogen shares substantially underperformed the Nasdaq over the most recent one-year two-, 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 120 to 1.

Given underperformance and overpay, I voted Against it.


4. Federal Forum Selection Provision

Requiring federal securities litigation to be brought in federal court has the potential to reduce the company’s litigation costs, without unduly burdening would-be plaintiffs.

Vote: FOR

Biogen 2021: Shareholder Proposals

5. Disclose Lobbying Activities

Additional information on the company’s direct and indirect lobbying expenditures and related management control would provide shareholders with a better understanding of lobbying activities and any related risks and benefits.

The attack on the U.S. Capitol and the “Big Lie” challenging the validity of the election results, revealed an entirely new level of reputational risk for corporate lobbying expenditures, particularly when delegated to third-party groups. Biogen stopped PAC contributions to all politicians.  Questions remain. Was it an emergency measure to repair reputational damage or something more lasting?

According to a 2019 study, trade associations and social welfare groups spent $535 million on lobbying in 2017 and $675 million on unregulated public policy efforts. The $675 million that did not qualify as federal lobbying includes strategic consulting, broadcast, and astroturf campaigns. This highlights a large unknown risk for investors. How much is our company spending on undisclosed grassroots lobbying efforts?

We understand that trade associations and other non-profit organizations can serve a useful business purpose. However, Biogen’s lack of public disclosure risks damage to its already precarious reputation. See my Exempt Solicitation filed at the SEC.

Vote: FOR.

6. Report on Gender Pay Gap

Shareholders would benefit from additional information allowing them to better measure the progress of the company’s diversity and inclusion initiatives.

Vote: FOR.

Biogen 2021 CorpGov RecommendationsProxy Insight

Proxy Insight reported Austrailia Super when I last checked. They voted Against forum selection amendments; For all other items.  

I looked up a few funds in our Shareowner Action Handbook. According to Calvert, “the board comprises fewer than two people of color or is less than 40% diverse overall. The SP500 company does not provide ethnic diversity data for the board on either the aggregate level or individual level.” They voted Against Denner, Mantas, Papadopoulos, Rowinsky. They voted Against Pay for granting departing CFO Capello excessive severance payments; For Lobbying and Pay Gap proposals for additional information. Trillium voted Against the same directors as Calvert for the same reasons. They voted Against Pay; For Lobbying and Pay Gap proposals.

CorpGov Votes:

  1. Directors: AGAINST Denner, Dorsa, Leaming, Mulligan, Papadopoulos, Posner, Rowinsky, and Sherwin.
  2. Auditor: AGAINST
  3. Executive Compensation: AGAINST
  4. Federal Forum Selection Provision: FOR
  5.  Lobbying Activities: FOR
  6. Gender Pay Gap: FOR

Biogen 2021: Issues for Future Proposalsinsightia

Looking at insightia for anti-shareholder provisions:

  • No requirement to separate CEO and Chair

Biogen 2022: Mark Your Calendar

Stockholder proposals submitted pursuant to Exchange Act Rule 14a-8 and intended to be presented at our 2022 annual meeting must be received by our Secretary by December 24, 2021.

Related Posts

Lobbying Disclosure Sought by Investors

Investors Seek Disclosure of Corporate Lobbying Expenses

Money and Politics Get a Divorce


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.


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