Kellogg 2022

Kellogg 2022 Proxy Recommendations

Kellogg 2022 annual meeting is on April  29, 2022, at 10:00 am Pacific. It is a virtual-only meeting on the Broadridge platform. Of course, I recommend voting in advance, especially since they have made it very difficult to vote at the meeting and maybe even to enter the meeting. To enhance corporate governance and long-term value, vote Against Laschinger, Tastad, pay, auditor, and incentive plan. Vote FOR CEO Compensation to Weigh Workforce Pay and Ownership.

Kellogg Company, together with its subsidiaries, manufactures and markets snacks and convenience foods. The company operates through four segments: North America, Europe, Latin America, and Asia Middle East Africa. Its principal products include crackers, crisps, savory snacks, toaster pastries, cereal bars, granola bars and bites, ready-to-eat cereals, frozen waffles, veggie foods, and noodles. Below, is how I voted and why in a much shorter format than I’ve used in prior years since I am pressed for time.

I voted with the Board’s recommendations 25% 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.

Kellogg 2022: ISS Rating

Egan-JonesKellogg Company’s ISS Governance QualityScore as of April 1, 2022, is 6. The pillar scores are Audit: 2; Board: 5; Shareholder Rights: 8; Compensation: 4.

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.

Kellogg 2022: CorpGov Recommendations

ItemEgan-Jones RecommendationCorpGov.net
1A-1D – Election of DirectorsFOR, except (1B) LASCHINGER AND (1D) TASTADFOR, except (1B) LASCHINGER AND (1D) TASTAD
2 – Advisory Vote to Approve Executive CompensationAGAINSTAGAINST
3 – Ratification of the Appointment of Independent AuditorsAGAINSTAGAINST
4 – Approval of the Kellogg Company 2022 Long-Term Incentive PlanAGAINSTAGAINST
5 – Shareholder Proposal for CEO Compensation to Weigh Workforce Pay and OwnershipFORFOR

Kellogg 2022: Proxy Voting Notes

CEO pay is $10.7M. That is just too high for me. The CEO-to-worker pay ratio was 242:1. I voted against Executive Compensation and members of the Compensation Committee (Laschinger and Tastad). E-J had a similar analysis and found the long-term incentive plan is not fully aligned with shareholders. PricewaterhouseCoopers LLP has served as the auditor for 85 years. At some point, auditors can lose their independence if they stay too long.

Kellogg 2022: Item 5: CEO Compensation to Weigh Workforce Pay and Ownership

This proposal from me (James McRitchie), simply asks the Board to consider pay and stock ownership incentives of US Company employees when setting targets for CEO compensation. Bank of America, Bristol-Meyers Squibb, and several others this year have embraced this approach.

Kellogg explains how it compares pay against peer companies in the proxy and argues, “the core principles that inform our executive compensation approach are pay for performance, shareowner alignment, values-based and risk mitigation” when setting CEO pay. Apparently, comparing CEO pay with the pay of other Kellogg employees is not considered and they have no desire to do so.

CEO candidates from inside companies generally perform better than those from outside. Shouldn’t Kellogg discuss pay and stock ownership in the context of its internal employees, as well as outside competitors?

Other RecommendationsProxy Insight

Proxy Insight had reported the votes of Calvert when I last checked. 

In looking up a few funds in our Shareowner Action Handbook, I see several funds have reported their votes. CBIS voted For all items except auditor. Calvert voted against all directors for failing to release EEO-1 report. They voted for #5. Consideration of pay grades and/or salary ranges of all classification of company employees when setting target amounts for CEO compensation would serve to further eliminate excessive pay disparities – Excessive pay disparities could pose risks to long-term shareholder value, and impact employee morale as well as a company’s standing in the communities in which it operates.

Kellogg 2022: Issues for Future Proposalsinsightia

Looking at insightia for anti-shareholder provisions:

  • No requirement to separate CEO and Chair
  • Classified board
  • Shareholders cannot take action by written consent
  • Supermajority requirements

Kellogg 2022: Mark Your Calendar

In order for a stockholder proposal to be considered for inclusion in our proxy statement for next year’s annual meeting, the written proposal must be received by us no later than October 8, 2022 and should contain such information as is required under our Bylaws. Such proposals will need to comply with the SEC’s regulations regarding the inclusion of stockholder proposals in our proxy materials.

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