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This Week in Proxy Votes: Lobbying, Drug Prices and More
4 / 13 / 2018
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Proxy vote season is in full swing. Here are the kinds of votes you can expect to see this week. Make an informed decision and take control of your shares.

External Relations

Lobbying Disclosure

American companies spend millions on lobbying and lobbying-related activities each year. That covers both direct lobbying, which is direct communication with a member of a legislative body, and grassroots lobbying, which is money paid to influence the public and their likelihood of contacting their representatives. Through trade associations and memberships to Chambers of Commerce, an individual company’s lobbying spend can reach millions yearly.

In these votes, shareholders are asking companies to be transparent about to whom they make lobbying payments and how they reach decisions on those payments.

Who’s voting for lobbying reports?
AbbVie Pharmaceuticals, AT&T, IBM, NRG, Pfizer and Verizon.

Metrics for Executive Compensation

Executive compensation (as decided by a board of directors) is based on a variety of factors that differ from company to company. Shareholders at some companies want their boards to incorporate specific metrics and milestones into their decisions on executive compensation. Note that these shareholder resolutions ask not for the board to take this action but to research and create a report on the impacts of taking these actions.

Companies embroiled in recent scandals over the sometimes sky-high prices of prescription drugs have seen shareholder prices and reputation suffer. As a result, shareholders at Bristol-Myers-Squibb (BMY) and AbbVie, pharmaceutical companies, are asking the companies to investigate drug pricing as a possible metric for executive compensation.

Shareholders at Dow-Dupont want a report on incorporating ESG metrics into executive compensation. Shareholders at Verizon want a report on how meeting milestones for cyber security and privacy protection would work into executive compensation.

Corporate Governance & Proxy Access

Independent Chairperson

The independence of the head of the board of directors for a company has long been a concern. The board of directors has a fiduciary duty to represent the interests of a company’s shareholders and ensure a company is moving in the right direction. They oversee a company’s executives – and their pay. So does it really make sense for a CEO, often also the chairperson of the board, to decide his or her own salary?

Shareholders are asking numerous companies this spring to ensure either that the CEO is not also the chairperson, or, taking it a step further, that the chairperson is entirely independent from the company. Making the chairperson independent can have either a positive or negative impact on a company’s value, acknowledges Glass Lewis, an organization that makes recommendations to shareholders for proxy votes on ESG criteria (and with whom OpenInvest partners), but they maintain that the separation can eliminate some serious conflicts of interest.

Who’s voting on an independent chairperson?
Abbott Labs, AbbVie Pharmaceuticals, American Express, AT&T, Bank of America, GE, IBM, and Pfizer.


For people who are unfamiliar with proxy voting and shareholder rights (and that’s most of us!), some of the issues surrounding proxy access can be confusing. Some of the more common proposals this year are as follows:

Calling a Special Meeting

Shareholders usually meet once a year when the board of directors calls investors together to report on the previous year and vote on ballot measures . However, investors can sometimes call ‘special meetings’ to deal with important matters as they come up. The rules on whether investors can call special meetings vary from company to company, and regulations on those meetings vary from state to state. Usually, a group of shareholders need to own some non-trivial percentage of the company in order to call a special meeting. Special meetings could be called in the event of a crisis like a data breach or scandal to ensure that investor interests are central in critical decision making.

Shareholders are requesting that companies reduce the minimum portion of the company they need to own to call a special meeting.

Who’s voting on reduced minimums for special meetings?
Bristol-Myers-Squibb, DowDuPont, IBM, Johnson & Johnson, Marathon Petroleum, PepsiCo, and Verizon.

Act by Written Consent

While most shareholder action takes place at annual meetings or special meetings, some shareholders also want the right to “act by written consent”. That means that shareholders can write to the board of directors requesting some type of action. In order for the Board and management to act on the request, the same amount of share ownership required to pass a resolution is needed to write in on the act (that minimum is different from company to company).

Who’s voting on the right to act by written consent?
American Express, AT&T and GE.

Director Nominations

Director positions are sought-after but restricted: at many companies, management nominates most of the directors. Individual shareholders have to have a non-trivial amount of ownership to nominate a director, and they may also have a limited number of nominees.

Shareholders are asking a few things. Most commonly, to reduce the minimum shares they are required to own in order to nominate a director. Sometimes there is a limit on the number of shareholders who can aggregate their ownership to reach that minimum, so some shareholders are asking that limit be removed. And finally, some shareholders are asking that a minimum number of shareholder-nominated directors sit on the board at a given time.

Who’s voting on nominations and board members?
Alaska Air and AT&T.

Unique Votes

Shareholders at DowDuPont are asking the company for the following:

  • A report on the impacts of a deadly 1984 chemical spill in India overseen by a company acquired by DowDuPont on DowDuPont’s current operations in India
  • A report on executive compensation for 2018, to be released next year at the annual shareholder meeting
  • That all voting majorities in the company’s charter and bylaws that are higher than a simple majority (e.g. a 2/3rds or super majority) be reduced to a simple majority

Shareholders at Verizon are asking that the company:

  • Change the language around executive compensation so that bonuses can be “clawed back” more easily for behavior harmful to the company
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