Tag: Shareholders

Investors Probe Companies on Covid-19 Transition Plans

Investors are pushing companies to address things like hazard pay and whether temporary policies and practices related to employees need to stay in place as businesses transition out of the depth of the pandemic.

Yesterday, New York City comptroller Scott Stringer sent a letter to the Amazon board’s leadership development and compensation committee asking chair Judith McGrath to address at its upcoming annual meeting scheduled for May 27 “media reports regarding widespread Covid-19 health and safety concerns among Amazon employees, including reports that the company has retaliated against some employees and is pressuring sick employees to come to work.”

“While Amazon management has announced numerous initiatives to keep their employees safe, the onus is on the independent members of the Amazon Board of Directors to report on how they are overseeing the progress of these initiatives and to ensure that these investments produce outcomes beneficial for both employees and shareowners,” the letter states. It asks the board to report to investors on the impacts and outcomes of the steps the company says it has taken to protect employees, including volume trends in Coronavirus cases among employees, days lost due to Covid-related illnesses and complaints filed with the Occupational Safety and Health Administration. The letter also asks for the frequency of committee meetings during the pandemic, noting that it has only met three times per year each year for the past five years. Other boards are likely to see similar versions of this letter from investors, if they haven’t already.

Investors May Retaliate If ‘Silenced’ at Virtual Meetings

As companies revamp annual meeting formats in light of the Covid-19 pandemic, investors and governance experts are warning boards that if investors perceive that the shift to virtual meetings is limiting shareholder rights, they will retaliate next year.

According to a review of SEC filings by S&P 500 companies by public company intelligence provider MyLogIQ, as of April 27, 260 S&P 500 companies had disclosed plans to switch to virtual meetings, and more will likely do so, sources say. However, investors say some companies are not allowing proponents to present their own proposals at meetings, limiting shareholder question-and-answer sessions and building in other mechanisms that give companies more control over the meeting, to investors’ ire.

In fact, some sources say investors may vote against board directors or other management recommendations during next year’s proxy season if companies limit rights this year. Accordingly, directors should ensure that they are available in the meetings and that management is allowing time for shareholders to raise concerns and explain proposals, sources say.

Boards Face ‘Gut-Wrenching’ Talks on Dividends

The biggest companies in the United States are about to report an overall negative earnings quarter for the first time since the Great Recession of 2009. In the wrenching wake of the pandemic, boards had better conserve cash against a sharp recession and corporate losses, financial experts say. That puts dividends in the cross hairs.… Continue reading Boards Face ‘Gut-Wrenching’ Talks on Dividends

How Coronavirus Spread Through Corporate America

With the first quarter in the books, big companies are preparing to disclose to investors early indications of the economic toll of the coronavirus pandemic. The respiratory illness has shut down many parts of the U.S. economy, spurring a wave of layoffs and furloughs that resulted in a record 17 million unemployment claims in a span of three weeks. It also set off a scramble by companies to conserve cash.

The Wall Street Journal, with help from data tracker MyLogIQ, analyzed public filings for companies in the S&P Composite 1500 Index—which covers about 90% of U.S. market capitalization—to assess the impact thus far. Among the findings: Almost 300 companies withdrew their financial guidance. About 175 companies suspended stock buybacks or cut their dividend. One hundred firms that together employ some three million people said they would furlough workers.

FORECAST PROFIT

Hundreds of companies in the S&P 1500 withdrew their previously issued full-year guidance, citing Covid-19 as the catalyst. Airlines were among the first, though retailers now account for about a quarter of the 295 companies that pulled their profit or sales forecasts as of April 10.

Best Practices for Virtual Board Meetings

Directors are making plans to hold their next board meeting remotely to combat the spread of the novel coronavirus amid the ongoing pandemic. However, sources recommend that directors brush up on virtual meeting etiquette and ask corporate secretaries to ensure they are following applicable state laws on meetings even if they are meeting remotely.

“A good chairman of the board or a good CEO will make sure everyone will be heard,” says Krish Ramakrishnan, executive chair and co-founder of BlueJeans Network, an enterprise-focused, cloud-based videoconferencing provider.

For example, Ramakrishnan says, during a videoconferenced board meeting, the chair or lead director should advise attendees to raise their hand if they want to speak — rather than simply raising their voice as one might do on a phone call to be heard — and be sure to call on directors as they indicate they have something to say. He also recommends scheduling time for short breaks in between agenda items or longer discussions just as directors would do if they were meeting in person.

Eyeing Lawsuits, Boards Tighten Limits on Director Pay

Boards are continuing to adopt limits on the amount of compensation directors can earn in a year to protect against pay lawsuits alleging breach of fiduciary duty. However, as more suits have progressed, some boards are implementing new limits that appear to be trending lower than those adopted previously, and a few boards have even reduced existing limits.

For instance, the Synaptics board had previously adopted a $750,000 limit that applied to equity grants awarded to directors in a fiscal year. Starting in 2019, however, the $750,000 limit will now apply to cash and equity paid to directors. Similarly, the Alnylam Pharmaceuticals board adopted limits in 2016 covering the maximum number of shares of common stock that could be awarded to directors in initial and annual stock option grants. In 2018, the board reduced the number of options grants to directors and implemented new, lower limits based on the reduced options grants and adopted an aggregate limit covering the maximum number of shares that could be awarded to the full board.

Turning Around a Low Say-On-Pay Vote

Say-on-pay votes remain a critical way for shareholders to express discontent with executive compensation packages. But they also act as a barometer for shareholder dissatisfaction with the board. Gauging how investors might vote on say on pay ahead of the company’s annual meeting can help avoid an embarrassing or contentious director reelection vote or other… Continue reading Turning Around a Low Say-On-Pay Vote

Want the Best CEO? Here’s How Much It Will Cost

Royal Dutch Shell shareholders are not too pleased about CEO Ben van Beurden’s 8.9 million euro (about $10.56 million) annual pay package, with advisory firm Institutional Shareholder Services (ISS) urging investors to reject the company’s executive compensation plan, while the Financial Times has reported that a top 20 shareholder will vote against the latest executive… Continue reading Want the Best CEO? Here’s How Much It Will Cost