Thermo Fisher Scientific 2021 annual meeting is May 19, 10AM Pacific Time. To attend, vote, and submit questions during the Annual Meeting visit here. From there you will at least need the control number you got from ProxyVote or elsewhere. Of course, I recommend voting in advance. To enhance long-term value. Vote AGAINST Casper, Chai, Harris, Lynch, Manzi, Sørensen, Sperling, and Weisler, Auditor, and Pay. Vote FOR Shareholder Right to Call Special Meetings.
Thermo Fisher Scientific Inc. offers life sciences solutions, analytical instruments, specialty diagnostics, and laboratory products and services worldwide. The company, incorporated in 1956, is based in Waltham, Massachusetts. Most shareholders do not vote. Reading through 85 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 7 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 27% 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.
Thermo Fisher Scientific 2021: ISS & Sustainalytics Ratings
From the Yahoo Finance profile page: Thermo Fisher Scientific Inc.’s ISS Governance QualityScore as of April 30, 2021, is 6. The pillar scores are Audit: 1; Board: 9; Shareholder Rights: 5; Compensation: 6.
Thermo Fisher Scientific 2021: Board Proposals
1. Directors
Egan-Jones Proxy Services recommends against 1A) Marc N. Casper, 1F) Thomas J. Lynch, 1G) Jim P. Manzi, and 1K) Scott M. Sperling. E-J believes Casper warrants opposition for failing to address cybersecurity issues. The other directors who served for longer than 10 years are not independent. Additionally, since I voted against Executive Compensation I also voted against members of the Compensation Committee. Most have also served for more than 10 years, but Dion J. Weisler has not, so I am adding him to the list to vote Against. Additionally, the Board lacks diversity, so I voted against members of the Nominating and Corporate Governance that are not already included above: Nelson J. Chai, C. Martin Harris, and Lars R. Sørensen. I voted for R. Alexandra Keith, even though she serves on the nominating committee since the company needs more women on the Board, not fewer.
Vote: AGAINST Casper, Chai, Harris, Lynch, Manzi, Sørensen, Sperling, and Weisler.
2. Executive Compensation
Thermo Fisher Scientific Summary Compensation Table shows the highest paid named executive officer (NEO) was CEO Marc N. Casper at $26.4 M. I’m using Yahoo! Finance to determine market cap ($184 B) and I define large-cap as $10B, mid-cap as $2-10B, and small-cap as less than $2B. Thermo is a large-cap company.
According to MyLogIQ, the median CEO compensation at large-cap corporations was $13M in 2020. CEO Marc N. Casper, at $26.4M, is at double that amount. Thermo shares beat large-caps over the most recent two-, and five-year time periods but missed during the latest one-year period. The ratio of the annual total compensation of the CEO to the median of the annual total compensation of all employees was 367 to 1.
Egan-Jones Proxy Services found pay aligned with the long-term interest of its shareholders. They recommend voting For. Given my concern for the growing wealth disparity, I could not in good conscience vote that way.
Vote: AGAINST.
3. 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 (19 years). No other issues appear significant.
Vote: AGAINST
Thermo Fisher Scientific 2021: Shareholder Proposals
4. Shareholder Right to Call Special Meetings
This good corporate governance proposal comes from Myra Young. Since I (James McRitchie) wrote it for my wife, of course, we voted FOR. Egan-Jones also recommends Against.
Our proposal to allow shareholders with 15% of shares to call a special meeting, prompted the Board to amend the bylaws. Shareholders with 25% of shares can now hold special meetings. So, that is already a win for shareholders.
However, many shareholders do not vote, so should not be considered potential shareholders who would call a special meeting. Last year, for example, 12% of shareholders did not vote. Additionally, companies often impose a difficult administrative burden on shareholders calling a special meeting. 15% is a more appropriate threshold.
Vote: FOR
Thermo Fisher Scientific CorpGov Recommendations
Proxy Insight reported only the votes of Trillium when I last checked. They voted Against Chai, Harris, Keith, Sorensen, and Pay; For all other items.
In looking up a few funds in our Shareowner Action Handbook, Norges voted Against Casper and Special Meetings. I see Calvert vote Against Chai, Harris, Sorensen, and Pay; For all other items. CBIS voted Against the auditor, For all other items. Australia’s Local Government Super vote For all except Pay.
- Directors: AGAINST Casper, Chai, Harris, Lynch, Manzi, Sørensen, Sperling, and Weisler.
- Executive Pay: AGAINST
- Auditor: AGAINST
- Shareholder Right to Call Special Meetings: FOR
Thermo Fisher Scientific 2021: Issues for Future Proposals
Looking at insightia for anti-shareholder provisions:
- No requirement to separate CEO and Chair
- Supermajority requirements to amend bylaws
Thermo Fisher Scientific 2021: Mark Your Calendar
Shareholder proposals must be delivered to the Corporate Secretary at the principal executive office of the Company not less than 60, nor more than 75, days prior to the first anniversary of the date on which the Company mailed its proxy materials for the preceding year’s annual meeting of shareholders. Accordingly, for the 2022 Annual Meeting of Shareholders, reciept no earlier than January 23, 2022, and no later than February 7, 2022. Proposals received at any other time will not be voted on at the meeting.
Related Posts
Warnings
Be sure to vote for each item on the proxy. Any items left blank get 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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