Veeva Systems 2021 annual meeting is June 23, 9 AM Pacific Time. To attend, vote, and submit questions during the Annual Meeting visit here. To participate, you will need the 16-digit control number provided on your proxy card or voting instruction form. I recommend voting in advance. Enhance long-term value. Vote AGAINST Gordon Ritter, the Auditor, and Special Meetings at 25%; FOR other directors, Pay and Special Meetings at 15%, and say on pay 1-year frequency.
Veeva Systems Inc. provides cloud-based software for the life sciences industry in North America, Europe, the Asia Pacific, the Middle East, Africa, and Latin America. Most shareholders do not vote. Reading through 64+ 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.
Veeva Systems 2021: ISS Ratings
Veeva Systems Inc.’s ISS Governance QualityScore as of April 30, 2021, is 9. The pillar scores are Audit: 1; Board: 4; Shareholder Rights: 10; Compensation: 9.
Veeva Systems 2021: Board Proposals
Egan-Jones Proxy Services generally recommends against directors who served for much longer than 10 years because that could compromise their independence. Directors with 10 or more years on the Board: Founder Peter P. Gassner, Co-Founder Matthew J. Wallach, and Gordon Ritter. I am going to give a pass to the two co-founders but will vote Against Gordon Ritter.
Vote: AGAINST Gordon Ritter.
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. KPMG LLP has served for 11 years. No other issues appear significant
Veeva Systems Shareholder Proposals
Veeva Summary Compensation Table shows the highest paid named executive officer (NEO) was EVP-Global Sales Alan Mateo at $3.4 M. I am using Yahoo! Finance to determine market cap ($38.7 B) and I define large-cap as $10B, mid-cap as $2-10B, and small-cap as less than $2B. Veeva Systems is a large-cap company.
According to MyLogIQ, the median CEO compensation at large-cap corporations was $12.9 M in 2020. Exec VP Alan Mateo at $3.4 M is substantially below that amount. Veeva shares outperformed the S&P 500 over the most recent five- and two-year time periods but underperformed (barely) during the latest one-year time period. The ratio of the annual total compensation of the CEO to the median of the annual total compensation of all employees was 2.6 to 1.
It is always better to have a vote on pay every year to ensure better alignment and accountability.
Vote: FOR the One-year option.
In response to my shareholder proposal to allow shareholders with 15% of the vote to call special meetings, the Board placed this measure on the proxy to allow shareholders with 25% of the vote to call a special meeting. So, that is already a win for shareholders.
I was willing to accept 20% but the Board was unwilling to negotiate on this issue. Keep in mind that at many companies only 80% of shares are consistently voted. Shareholders looking to hold an emergency special meeting are unlikely to find any support at all among shareholders who do not vote, so 25% could easily become 30% of the conscientious, consistent voters. I recommend voting Against this proposal and For my proposal to allow shareholders with 15% to call a special meeting.
ADDITIONALLY: The Board’s proposal requires that only shareholders that have continuously held shares for one year or more can call a special meeting. Imagine trying to gather and submit all the documentation the company may require for that unusual provision. The Board is attempting to create a logistics nightmare. For example, stock holdings in most portfolios vary considerably from quarter to quarter as funds rebalance or take other actions. Veeva could require those calling a special meeting to document they have held the requisite stock continuously each day for a year. This is a very unusual provision that companies have recently been adopting to make themselves look good on the surface. Unfortunately, many proxy voting policies do not dig into the weeds, the Veeva may fool many of its shareholders.
Veeva Systems 2021: Shareholder Proposals
15% is the more appropriate level, especially given that shareholders do not have the right to act by written consent. Keep in mind, this would be an emergency situation.
Proxy Insight reported no votes when I last checked.
In looking up a few funds in our Shareowner Action Handbook, I see Calvert vote For all items. CBIS voted Against the auditor, For all other items. Australia’s Local Government Super vote For all except #5. Trillium voted For Auditor, Amend Proxy Access, and Improve Executive Compensation; Against all other items.
- Directors: AGAINST Gordon Ritter.
- Auditors: AGAINST.
- Executive Pay: FOR.
- Vote on Frequency of Executive Compensation: One Year.
- Amend Certificate of Incorporation to All Shareholders to Call Special Meetings: AGAINST
- Shareholder-Allow Shareholders to Call Special Meetings: FOR
Veeva 2021: Issues for Future Proposals
Looking at insightia for anti-shareholder provisions:
- No requirement to separate CEO and Chair.
- Written Consent not permitted.
- Shareholders cannot hold special meetings.
Veeva 2022: Mark Your Calendar
Shareholders may present proper proposals for inclusion in our proxy statement and for consideration at our next annual meeting of shareholders by submitting their proposals in writing to our Corporate Secretary in a timely manner. In order to be included in the proxy statement for the 2022 annual meeting of shareholders, shareholder proposals must be received by our Corporate Secretary no later than January 10, 2022 and must otherwise comply with the requirements of Rule 14a-8 of the Exchange Act.
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.