The Apple 2019 annual meeting is March 1st. To enhance long-term shareholder value, vote AGAINST directors Levinson and Gore., as well as pay and the auditor. Vote FOR shareholder proposal #4 Proxy Access Amendments and against #5, which aims to set up an ideological litmus test for directors. Continue Reading →
Prison Labor concerns raised again by NorthStar Asset Management won nearly 29% of shareholder votes at Costco Wholesale meeting on January 24, up from almost 5% last year. The proposal asked for enhanced analysis and disclosure on risks related to prison labor in the company’s supply chain. Yes, if you just read that old link from a Change.org survey you saw the Thirteenth Amendment to our Constitution (to abolish slavery) includes the following:
Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction. Continue Reading →
Apple Proposal 4
Apple proposal 4 would raise the number of “Shareholder Nominees” eligible to appear in Apple’s proxy materials from 20% of the directors then serving to 20% of the directors then serving or 2, whichever is greater. Apple currently has 8 directors; 20% of 8 rounded down to the nearest whole number is 1. A single shareholder nominated and elected director could be easily isolated and ineffective. They might not even be able to get a second on a motion in a board meeting to discuss important topics. Continue Reading →
Franklin Resources 2019 annual meeting is 2/12/2019. Shareholder rights are under attack. Vote AGAINST Barker, Johnson, Pigott, Stein, and Waugh, as well as the auditor. Most important, vote AGAINST the Board’s attempted Ratification of a Substitute Special Meeting Amendment. Shields up! Vote to protect shareholder rights and enhance long-term shareholder value. Continue Reading →
Thanks to Scott Hirst‘s articles and papers on the subject, I can borrow his catchy label for one of biggest current problems in corporate governance. Frozen charters are supermajority provisions that are impossible to repeal. He appears to attribute that to the 2012 change by the New York Stock Exchange (NYSE), which changed its policies to prohibit brokers from voting uninstructed shares on corporate governance proposals. I would lay a larger share of the blame on founders who wrote the frozen charters to forever retain a large degree of control. Regardless of who is to blame, frozen charters are a problem that needs fixed. Managers, boards, shareholders, Republicans and Democrats should all be able agree on a solution. Continue Reading →
The Cisco Systems 2018 annual meeting is December 12th. To enhance long-term shareholder value, vote AGAINST directors Arway, Desroches, Grauer and Thiry, as well as pay and the auditor. Vote FOR shareholder proposals to split chair and CEO and to Deduct Impact of Stock Buybacks from Executive Pay. CorpGov.net is an independent source for information about shareholder rights by real Main Street Investors, not sock puppets. Continue Reading →
The Guidewire Software 2018 annual meeting is December 6th. Vote AGAINST ratifying the auditor and pay. Vote FOR our proposal to declassify the board to enhance long-term shareholder value. Continue Reading →
For years, the “Chevedden group” (Chevedden, McRitchie/Young and Steiner) has focused almost exclusively on governance proposals. More democratic corporations are likely to listen to their shareholders on other issues as well. Democracies facilitate voice and the exchange of ideas. Fighting for environmental and social issues, while extremely important, felt like addressing symptoms, rather than root causes.
Chevedden group proposals seek to declassify boards, require majority votes to elect directors, allow proxy access, and allow shareholders to call special meetings. Since many large cap companies have now adopted such provisions, we are broadening our scope to also focus on other issues. Below are some preliminary results for 2018. Continue Reading →
Glass Lewis 2019 proxy advice updates address many issues. See 2019 Proxy Paper Guidelines: An Overview of the Glass Lewis Approach to Proxy Advice.
I have reproduced much of the summary of changes below, leaving off the section discussing clarifying amendments. One that stands out for our small group of so-called ‘gadflies’ addresses our concern that several boards hijacked shareholder proposals this past season by seeking ratification of existing policies and the exclusion of a shareholder proposal though a no-action request. In an email, John Chevedden noted the following: Continue Reading →
Salesforce CRM Adopts Special Meetings provision for shareholders with 15 Percent Shares.
I am just circling back and can now ensure myself and readers that our 50.5% win on our 2017 proposal was implemented. See exhibit 3.1 and 3.2 of 8-K filing. We also expect to see action on our 2018 proposal to end supermajority provisions, which won over 80% of the vote in 2018. Continue Reading →
The FedEx 2018 annual meeting is September 24th. Vote AGAINST John A. Edwardson, Paul S. Walsh, Marvin R. Ellison, John C. (“Chris”) Inglis, Shirley Ann Jackson and Susan C. Schwabas, as well as the pay package. Vote FOR all three shareholder proposals. Continue Reading →
In June I submitted a proposal to WDFC to allow special meetings.
WDFC to Allow Special Meetings: The Proposal
Provide Right to Call Special Shareholder Meeting
RESOLVED: The shareholders of WD-40 Company (‘WDFC’ or ‘Company’) hereby request the Board of Directors take the steps necessary to amend our bylaws and each appropriate governing document to give holders with an aggregate of 15% net long of our outstanding common stock the power to call a special shareowner meeting. This proposal does not impact our board’s current power to call a special meeting. Continue Reading →
Shareholder Alert – PX14A6G 1 g815180px14a6g.htm
Voluntary submission by John Chevedden, Redondo Beach, CA.
NetApp, Inc. shareholder since 2011
Vote Against Proposal 6
Proposal 6 asks shareholder to give management a pat on the back because management adopted a watered down version of a 2018 shareholder proposal on the right of 10% of shareholders to call a special meeting. Continue Reading →
Netflix Approach to Governance: Genuine Transparency with the Board (download) by David F. Larcker and Brian Tayan takes a look at one aspect of corporate governance at Netflix and finds “a radically different approach to information sharing” by management with the Board. Shareholders are largely left out of the equation.
Netflix Approach to Governance: Management
Netflix Approach to Governance has the appearance of a balanced look at how management shares information with the Board. There is no suggestion the approach can be widely copied. Says Larker,
I think it would be hard to put this type of system in place at older and more mature organizations. Innovative organizations that want and need the insights from board members can clearly adapt this type of approach. You need a CEO who wants a high level of discussion about strategy, etc., and is open to alternative points of view.
Transparency works at Netflix, at least in part, because CEO Reed Hastings understands board members would not have the confidence to make tough calls unless they have a better understanding of the company.
Transparency is hard to argue against, unless it leads to directors leaking information that reaches competitors. Larcker and Tayan interviewed CEO Reed Hastings and most of the board members. They describe two key features of what they appear to believe is remmanagement transparency.
Board members attend monthly and quarterly senior management meetings as observers. Communications to the board take the shape of approximately 30-page memos that are heavy on analysis and contain links to all relevant data on the company’s internal computer systems. (Another Netflix Disruption: A Transparent Board)
More frequent meetings with senior staff and more information allows Netflix directors to work more effectively, since they are better able to assess strategic developments. It is hard to tell what impact transparency is having on the company but,
Netflix has been enormously successful over the last five years. Revenues have nearly tripled, increasing to $11.69 billion from $4.4 billion at the end of 2013, while the market cap soared to $133 billion from $4.4 billion.
Directors like the approach.
The overall tone Reed has set, really from early days, is around transparency. … There is no editorializing. There’s no censorship.
It’s just a deep desire to hear rational, well-argued pros and cons of any decision.
No censorship and frank discussions between management and board; if other companies are not operating that way, why not? Equally important, why does that approach not carry through to the relationship between shareholders and the board?
Netflix Approach to Governance: Shareholders
Their research, part of the informative Stanford Closer Look Series, begins with the following sentence:
The hallmark of good corporate governance is an independent-minded board of directors to oversee management and represent the interests of shareholders.
The only other significant reference to shareholders comes later in the following sentence:
While fiduciary rules allow directors to rely exclusively on information provided by management, dynamics such as these can reduce the quality of that information and impair their ability to make good decisions on behalf of shareholders.
Even through the law allows directors to rely on what the CEO and other senior executives tell them, directors make better decisions when the company is more transparent – when they can observe meetings further down the chain and have more direct access to company relevant data. Yet, the Netflix approach to governance appears one-sided. Transparency and dialogue are missing when it comes to management and shareholders.
As I pointed out in a recent post, Netflix has repeatedly ignored shareholder votes. (Will Netflix Ignore Stockholders Again?) While proxy proposals are generally precatory, most companies implement those receiving a majority vote and often those that do not. The Netflix approach to governance appears to ignore proxy votes whenever legally possible.
- In 2014 a majority voted to declassify the board and to require a majority vote to elect directors.
- In 2015 similar proposals were voted and won. A majority of shareholders also voted against director Barton, who, although he lost, was up for reelection this year.
- In 2016 a majority of shares were voted in favor of proxy access, reducing supermajority vote requirements, and declassifying the board.
- In 2017 a majority of shares were voted in favor of proxy access, to declassify the board, to require a majority vote for electing directors and to eliminate all supermajority voting requirements. As far as I know, none of those proposals were implemented by the Board.
- In 2018 a majority of shares were voted in favor of the following:
- Reduce Ownership Threshold for Shareholders to Call Special Meeting (57%)
- Adopt Proxy Access Right (58%)
- Provide Right to Act by Written Consent (52%)
- Adopt Simple Majority Vote (85%)
- Amend Bylaws (72%) This was a binding proposal to require directors in uncontested elections to be elected by a majority of shares voted
Given the Netflix approach to governance with regard to shareholders, I expect the only proposal that will be adopted from this year is the binding proposal to require a majority vote in uncontested directors elections. The vote in favor surpassed the bylaw requirement of a two-thirds threshold.
Although I do not question the scholarship of Larcker and Tayan, their discussion of the Netflix approach to governance would benefit from an examination of shareholder relations with the board. We hope that is on their agenda for a closer look.
Netflix Approach to Governance: Other Views
- Netflix Shareholders Again Fail to Change Rules to Elect Board Members by Simple Majority Vote
- Consider Director Conduct at the 2018 Netflix annual meeting when you vote regarding directors in 2019
- Netflix Rejects Claims That Exec Bonuses Hurt Shareholders
- Netflix investors, once again, seek change in proxy access, voting rules
The DaVita 2018 annual meeting is June 18. Vote AGAINST Arway, Desroches, Grauer and Thiry, as well as pay. Vote FOR proxy access amendments to enhance long-term shareholder value. Continue Reading →
Eliminate Supermajority Voting Requirements
Proposal #6 asks the Board to eliminate supermajority voting requirements, seeking instead, that decisions by shareholders be made based on a majority of the votes cast for and against proposals. Continue Reading →
Celgene 2018 meeting, 6/13. Vote AGAINST several directors; FOR proxy access & independent board chair to enhance long-term shareholder value. Informed voting in 10 minutes. Continue Reading →
The Progenics Pharmaceuticals 2018 annual meeting is June 13. Vote AGAINST Crowley and Kishbauch, the stock incentive plan and FOR proxy access amendments to enhance long-term shareholder value. Vote to make our great company even better. Continue Reading →
The Caterpillar 2018 annual meeting is June 13. Vote AGAINST the pay package and FOR the shareholder proposals to enhance long-term value. Your vote can help make a great company even better. Continue Reading →
The Salesforce 2018 (CRM) annual meeting is June 12. CRM is on the right track. It needs a few good governance measures, including special meeting rights and an end to supermajority requirements. You can vote FOR both in the Salesforce 2018 proxy. Continue Reading →
The Biogen 2018 annual meeting is June 12. I voted AGAINST several directors and the pay package. Vote FOR the auditor and both shareholder proposals to enhance value.
Biogen Inc. (BIIB) discovers, develops, manufactures, and delivers therapies for the treatment of neurological and neurodegenerative diseases worldwide. Most shareholders do not vote because reading through 80+ pages of the proxy is not worth the time for the small difference your vote will make. Below, I tell you how I am voting and why.
If you have read these posts related to my portfolio for the last 22 years, have values aligned with mine, and trust my judgment, go immediately to see how I voted my ballot. Voting will take you only a minute or two and every vote counts.
Netflix Statement Re Proposal #4: Right to Call Special Meetings
This proposal simply asks for a shareholder right to call a special meeting. Special meetings are a way to bring an important matter to the attention of both management and shareholders outside the annual meeting cycle. That is important because there could be 15-months between annual meetings. The 15% threshold is still well above the 10% allowed by law, which many other companies provide. Emergencies do happen. 64% of S&P 500 companies provide for special meetings.
Let me also put this proposal in context.
Last year a majority of shares were voted in favor of proxy access, to declassify the board, a majority vote for electing directors and to eliminate all supermajority voting requirements. As far as I know, none of those proposals were implemented by the Board. Continue Reading →
Tesla Proxy Access, item #4
Tesla shareholders meet Tuesday, June 5, 2018, at 2:30 p.m. Pacific Time, at the Computer History Museum located at 1401 N. Shoreline Blvd., Mountain View, CA 94043. In the interest of more accurate press coverage of Tesla Proxy Access, item #4, I (James McRitchie) am posting the text of my draft presentation on Tesla Proxy Access in advance. Continue Reading →
Alphabet 2018 proxy recommendations. Alphabet is run by an Oligarchy. Will $GOOG overlords give up their position as a dictatorship? Are companies governed by dictatorships and oligarchies healthy for democratic governments? Shareholders can vote for change.
Alphabet Inc., through its subsidiaries, provides online advertising services in the United States and internationally. Most shareholders do not vote because reading through 80+ pages of the proxy is not worth the time for the small difference your vote will make. Below, I tell you how I voted and why.
If you have read these posts related to my portfolio for the last 22 years, have values aligned with mine, and trust my judgment (or you do not want to take the time to read it), go immediately to see how I voted my ballot. Voting will take you only a minute or two and every vote counts.
Netflix 2018 annual meeting is June 6, 2018. Vote FOR all of the shareholder proposals to enhance long-term value. The Board keeps ignoring our votes. We need to keep reminding them we want the normal shareholders rights.
Netflix (NFLX), an Internet television network, engages in the Internet delivery of television (TV) shows and movies on various Internet-connected screens. Most shareholders do not vote because reading through 70+ pages of the proxy is not worth the time for the small difference your vote will make. Below, I tell you how I am voting and why. If you have read these posts related to my portfolio for the last 22 years, have values aligned with mine, and trust my judgment (or you don’t want to take the time to read it), go immediately to see how I voted my ballot. Voting will take you only a minute or two and every vote counts.
Genomic Health 2018 annual meeting is June 6. Will 40% owner Baker Brothers Advisors LP allow proxy access? Genomic Health (GHDX) provides actionable genomic information to personalize cancer treatment decisions worldwide. If Baker Brothers eventually hopes to sell its shares into the market, they would do well to vote for proxy access. Other shareholders will pay a premium for shares of a company with proxy access and other corporate governance provisions that enhance board accountability.
Most shareholders do not vote because reading through 20+ pages of the proxy is not worth the time for the small difference your vote will make, especially when one shareholder has such control. Below, I tell you how I am voting and why.
If you have read these posts related to my portfolio for the last 22 years, have values aligned with mine, and trust my judgment (or you don’t want to take the time to read it), go immediately to see how I voted my ballot. Voting will take you only a minute or two and every vote counts.
Tesla 2018 annual meeting is June 5, 2018. Tesla, Inc. (TSLA) designs, develops, manufactures, and sells electric vehicles, and energy generation and storage systems in the United States and internationally. If Tesla is to survive and thrive, it needs a more independent board. The vote of shareholders will be crucial in deciding Tesla’s future.
Most shareholders do not vote because reading through 50+ pages of the proxy is not worth the time for the small difference their vote will make. I have done the work for you.
Below, I tell you how I am voting and why. If you have read these posts related to my portfolio for the last 22 years, have values aligned with mine, and trust my judgment (or you don’t want to take the time to read most of the post), go immediately to see how I voted my ballot. Voting will take you only a minute or two. Every vote does count. I voted against the Board’s recommendations 100% of the time on the Tesla 2018 proxy. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A). Continue Reading →
Alphabet and Facebook shareholders will once again vote on shareholder proposals at their 2018 annual shareholder meetings related to unequal voting structures. With growing concerns about data and privacy issues, shareholders will weigh in on how other company governance issues are also at play.
Voting results will influence whether America will continue its long course toward “democratic” corporate governance or will revert to corporate governance by oligarchs.
Explained NorthStar Asset Management CEO Julie Goodridge.
Through these shareholder resolutions, common shareholders have been showing concern for years regarding managements’ outsized voting rights at both companies, and this year’s proposal couldn’t be timelier given the recent fallout from seemingly endless data mismanagement issues at Facebook.
A proposal brought by socially responsible investment firm NorthStar Asset Management, Inc. at Facebook and Alphabet, with corporate governance activist and author James McRitchie as a co-lead filer at Alphabet, seeks to change this arrangement.
We are asking both Facebook and Alphabet to recapitalize the shares so that each share gets one vote. Alphabet and Facebook are publicly traded, and we believe that status as a public company should come with an equal right to vote. Given the scandals this year at Facebook, it is clearly time for shareholders to have meaningful input on company management issues.
At Alphabet, which has three classes of stock, insiders like Sergey Brin, Larry Page, and former chairman Eric Schmidt control 58% of the vote while owning less than 13% of economic stake combined. Similarly at Facebook, ordinary shareholders buying shares on public markets have access to shares with one vote (class A), while insiders like CEO Mark Zuckerberg own shares with 10 votes per share (class B). Critics of the voting structures at these companies point out that it would be essentially impossible for class A shareholders to “out-vote” the founders, even on significant or concerning matters.
According to Mari Schwartzer, NorthStar’s Director of Shareholder Activism and Engagement,
We can see this in results of the 2016 annual meeting in which Facebook proposed a new non-voting class of stock in order to allow Mr. Zuckerberg to give away the lion’s share of his wealth without losing control of the company. Our estimates indicate that about 71% of outside shareholders voted against the creation of this new class of stock, yet Mr. Zuckerberg moved forward with attempting to create it. To stockholders, this is evidence that Facebook does not take common shareholders’ wishes seriously.
Mr. Zuckerberg owns almost 14% of stake in the company but controls nearly 53% of the vote, which allowed the company proposal to pass; a shareholder lawsuit halted that aspiration last fall.
At last year’s annual meetings, NorthStar estimates that over 61% of Facebook class A (outside) shareholders and over 88% of Alphabet class A shares voted in favor of the recapitalization plan to one vote per share. NorthStar hopes those figures continue to stay strong at the upcoming annual meetings – Facebook shareholders vote this Thursday, May 31 while Alphabet shareholders will vote next week on June 6th.
This year is monumental for Facebook in particular, but for tech companies in general. The Cambridge Analytica scandal illustrated how risky and potentially damaging it can be to manage user data, but these issues aren’t at rest yet. Amazon’s personal assistant Alexa just hit the news last week when a private conversation was recorded and sent to a couple’s contacts. Clearly, these data privacy issues are concerns that shareholders should pay close attention to when they vote their proxies and think about how company governance plays a role here.
NorthStar’s Goodridge went on to explain that shareholder interests are not just about fairness:
We are very concerned about shareholders’ inability to deal with this issue at the board level. Mr. Zuckerberg has formed a board with close ties and loyalties to him. We do not believe that the board would step in to ask him to step down if another scandal were to wrack shareholder value further. Shareholder input is crucial for long-term value and company growth.
NorthStar Asset Management, Inc. is a wealth management company based in Boston with a focus on socially responsible investing. At NorthStar, creative shareholder engagement is a positive force for change.
Alphabet and Facebook are clearly trendsetting companies. As Alphabet and Facebook go, so goes the nation. Will our country increasingly be the headquarters of corporate dictatorships? Will corporate dictatorships support a strong democratic government in these United States of America, or will they continue to seek short-term power and profits for the few at the expense of conditions that favor the long-term broader interests of all their shareholders and users?
How shares are voted at Alphabet and Facebook could send a clear message to those in power. Help put an end to democratic-free zones. The oligarchs at both Alphabet and Facebook would do well to end their sovereign rule for their own self-interest.
Even if their votes were strictly tied to their economic stake, the founders of Alphabet and Facebook would still wield considerable power. Instead of being dictatorships they would have to listen to other shareholders and share power.
Instead of what some might consider “lapdog” boards, Alphabet and Facebook could attract more knowledgeable, independent directors, not afraid to speak their minds. Turning around corporate governance at Alphabet and Facebook could also preserve the reputations of these companies and their founders as leaders and avoid cumbersome regulations.
George Washington was encouraged to continue as President for life but stepped down for the good of the country. The founders of Alphabet and Facebook should take a page from history.
Amazon 2018 annual meeting is May 30th. View proxy. I do not have time to go through my usual voting rationale. I am too busy with companies where I have a proposal. However, I want to bring to your attention a very important proposal from Bruce Herbert at Newground Social Investments, starting at page 18. The topic is vote counting for shareholder proposals and it goes to the heart of democracy, or lack thereof, at Amazon. Vote today, especially for item 6. Do no let Amazon’s Board rig the vote. Continue Reading →
FB, Facebook, provides various products to connect and share through mobile devices, personal computers, and other surfaces worldwide. Most shareholders do not vote because reading through 60+ pages of the proxy is not worth the time for the small difference your vote will make. Below, I tell you how I am voting and why. If you have read these posts related to my portfolio for the last 22 years, have values aligned with mine, and trust my judgment (or you don’t want to take the time to read it), go immediately to see how I voted my ballot.
Voting will take you only a minute or two and every vote counts. The annual meeting is coming up on May 31, 2018. I voted with the Board’s recommendations 0% of the time. Facebook’s corporate governance needs a makeover, away from dictratorship. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A). Continue Reading →