Category: Agenda

‘Chaos Move’: Special Meetings Gain Support

Investors appear to be narrowing their scope when it comes to shareholder resolutions involving the right to call special meetings, experts say. Fewer proposals have been introduced this year, but those that have gone to a vote have seen a higher rate of support, suggesting that investors are targeting companies where they think they may be able to win.

One such company is Occidental Petroleum, which is now facing a lawsuit filed by Carl Icahn. The activist investor is demanding a books and records inspection over the energy giant’s deal to buy Anadarko Petroleum, which he opposes. The lawsuit suggests Icahn plans to call a special meeting to replace directors. A shareholder proposal to lower the ownership threshold to call a special meeting passed at Occidental’s annual meeting last month.

Similar resolutions on calling a special meeting of investors have passed at several companies this proxy season, Icahn or no.

Companies Boost Pay for Board Leaders

Boards are granting compensation increases to non-executive chairs and lead directors as both roles grow increasingly more complex and, more broadly, as governance processes and board quality take center stage with investors.

An analysis from SEC filings analyzer MyLogIQ shows that such companies as CIT Group, Insperity, International Flavors & Fragrances, Kroger, Old Dominion Freight Line, Penske Automotive Group , Sientra and Verint Systems have granted pay raises to lead directors in the past year, some more than doubling the retainers for the role. Others such as Carlisle Companies, ConMed Corp., HCP, Lyondell Basell Industries, Mosaic, Office Depot and Rent-A-Center boosted pay for board chairs. In addition, Walmart, which has a lead director and board chair, granted raises to directors in both roles following the board’s review of its annual pay benchmarking analysis.

Jet Perks: Which Travel Bills Were the Priciest?

The list of the top-10 biggest spenders on aircraft perks added a new member to its ranks: Facebook COO Sheryl Sandberg.

In 2018, Sandberg’s pay package included nearly $909,000 in aircraft perks, according to SEC filings analyzer MyLogIQ.

She ranks fourth on Agenda’s list of top-10 air travel spenders in the S&P 500.

First on the list is, once again, Mark Zuckerberg, Sandberg’s boss.

Zuckerberg’s corporate aircraft travel costs reached nearly $2.6 million, more than twice the amount of the next executive on the list, Tyson Foods chairman John Tyson. Tyson’s corporate jet travel amounted to almost $1.2 million, according to company disclosures.

A Tale of Two Scandals: Wells Fargo and Equifax

Wells Fargo and Equifax each suffered embarrassing corporate disasters in the recent past. Yet the companies are at much different points in their recoveries, say legal, governance and management observers. That makes them interesting studies in how boards oversee — or fail to oversee — crises and turnarounds.

The three-year cleanup of Wells Fargo’s management and compliance problems still looks far from complete. CEO Tim Sloan — who was appointed to clean up the mess following Wells’s fake-accounts scandal — suddenly resigned in March, and the interim chief is clearly a placeholder. The company faced angry protestors at its annual meeting last month after years of scandal.

By contrast, the transformation strategy at Equifax appears to be close to a denouement. That began with the almost immediate removal of former CEO Richard Smith, who presided over the credit-reporting company’s widely publicized data breach.

Agenda Research Vault – Director Churn Report

Agenda partnered with SEC filings analyzer MyLogIQ to obtain data points on the directors appointed to Russell 3000 board seats in the first three months of 2019. The following spreadsheets include additional data points beyond those presented in graphics and text for the article, “Boards on Cusp of Major Generational Shift” and can provide some additional context on the disclosed reasons directors left boards and a month-to-month comparison of the comings and goings of Russell 3000 board members.

Boards on Cusp of Major Generational Shift

As companies face continuous pressure to bring on diverse directors with current expertise in technology and cyber security, there are increasing indications that boards’ recruiting in response to that prodding has led to the first blush of a new generational shift on boards.

Several new data points show that there has been a ramping up of directors’ leaving board seats for various reasons. Sources say that much of that exodus has been made up of baby boomer directors who have reached or are approaching mandatory retirement age. Furthermore, as the remaining boomer board members see that a large portion of their peer group has left, more directors are likely to question whether they are still making the best possible contributions to the boards and companies they oversee.

According to exclusive data from SEC filings analyzer MyLogIQ, there were 772 directors from Russell 3000 boards who left board seats in the first three months of 2019 — the time of year when many decisions about board composition take effect — due to retirement, resignation, directors’ opting not to stand for reelection or other reasons such as medical leave. In 2018, the figure was 556, while the 2017 figure was 483. For a more granular breakdown of the data in this article, please visit our research vault.

Uber Drivers React to CEO Pay

In a highly anticipated announcement, Uber this month took the leap to go public. In the ride-hailing company’s registration statement, the company revealed that its top officers raked in between nearly $10 million and $48 million last year.

Directors serving on the boards of the new gig-economy unicorns that either have filed or are expected to file IPOs this year face different compensation challenges from some traditional companies, particularly because their workers are classified as contractors, not employees.

Uber CEO Dara Khosrowshahi was tasked with coming in to replace disgraced co-founder Travis Kalanick and clean up the brand after reports of companywide sexual harassment and discrimination surfaced in 2017. Khosrowshahi has a pay package worth more than $45 million, which is arguably in line with chief executives in his peer group, but given Uber’s non-traditional workforce, its past problems and its veritable online existence, it remains to be seen whether Khosrowshahi’s pay appears appropriate in the eyes of the company’s drivers.

Director Retirements Continue to Rise

Directors report that they are stepping down in order to support their boards’ aims to refresh the board composition. While mandatory retirement age is still a main driver of board turnover, some directors are leaving their board seats because it’s “simply the right time.”

Sandra Beach Lin, chair of the nominating and governance committee on the Wesco International board, informed the board last month that she would retire. Beach Lin has served as a director for 17 years, including 10 as nom-gov chair.

“I joined the board when I was in my forties, and so the mandatory retirement age of 72 wasn’t really a factor for me in this decision,” she writes in an e-mail. “I’m proud of the work that our nominating and governance committee has done to refresh the board and add members (i.e. one earlier this year and two others within the last five years), and we continue recruiting with that in mind.”