Getting Out the Vote

Michael Flack

JERRY SEINFELD tells a story about visiting the post office and noticing a wanted poster on the wall. He looks at the poster and checks the guy standing behind him. “If it’s not him,” he says, “I feel I’ve done my part.”

I own some individual stocks, so it’s that time of the year when I vote my proxies. I do the best I can at trying to understand the issues. Sometimes, I wonder whether I’ve really accomplished anything. Just like Jerry, though, when it’s all over, I feel “I’ve done my part.”

When I was younger and busier, I would stack the proxies and their associated annual reports on my desk and methodically go through them, trying to give each its due and then casting my vote accordingly. Now that I’m retired and have more free time, I can’t be bothered. I use the following shortcuts to allow me to vote as efficiently—meaning as quickly—as possible:

  • I vote for all proposals that would require an independent chairman. If I owned 100% of a company and employed a CEO, I would immediately fire him if he asked to be chair of the board. Why should a publicly owned company be any different?

Having an independent chair just makes common sense from a governance perspective. How can management manage themselves? Additionally, if a CEO has such little self-confidence as to demand to also be the chair, an investor needs to wonder about his or her leadership ability.

  • I vote against so-called classified boards, which have directors serving different term lengths. When I was employed, my performance was reviewed annually. Why should a company’s directors be any different?
  • I don’t vote for executive pay packages that include options. Since I own shares of a company’s stock, why would I want to incentivize executives with options?

After using these three heuristics, I then spend time only on proxies that pique my interest. This is what has piqued me so far this year:

1. D.H. Horton appointed Benjamin S. Carson to the board in April 2021 and he is now running for a permanent seat. Politics aside, what sense does it make to have a medical doctor, however talented, on the board of a company that builds houses?

Also, anyone who touts oleander extract as a cure for COVID based on the word of the My Pillow Guy should not be on the board of any company. This was an easy vote against Dr. Carson, though I would love to know WTF is going on.

2. Myra K. Young of Elkgrove, California, proposed that Agilent give 10% of shareholders the power to call a special shareholder meeting. Despite Agilent pleading that 10% was too low a threshold, I voted for Ms. Young’s proposal, thinking, “What the hell?”

3. An unknown shareholder of the Boeing Corp. proposed that Boeing create a report listing all its charitable contributions greater than $999. The board’s two-page response against the proposal seemed like overkill. It never mentioned anything detrimental that would come of the proposal.

I felt that the time it took to generate the response could have been used to generate the requested list, so I voted for the proposal. I also voted against any director who was on the board in the runup to the whole 737 MAX debacle.

4. The Jay Stanley Weisfeld Trust of Rochester, Vermont, proposed that IBM prepare “a public report assessing the potential risks to the company associated with its use of concealment clauses in the context of harassment, discrimination and other unlawful acts.” In the time the IBM board took to recommend a vote against the proposal—saying that “IBM does not prevent employees from discussing the terms and conditions of their employment”—it could have published the report, unless, of course, it does unethically use concealment clauses.

Companies may legitimately use concealment clauses in employment agreements to protect corporate information, such as intellectual capital and trade secrets. But many companies use concealment clauses to limit their workers’ right to speak openly about harassment, discrimination and other unlawful acts.

I must admit, before reading this specific proposal, I didn’t know what a concealment clause was or why it was used. It appears this was all stirred up by Apple’s recent unsuccessful attempt to exclude a similar proposal from its annual shareholder meeting, which in the end was voted down. After reading this IBM proposal, I felt the whole thing kind of stinks, so I voted for the proposal.

5. The DI Foundation proposed that, by the end of 2022, Enbridge—the oil and gas (O&G) pipeline company—”strengthen its net zero commitment such that the commitment is consistent with a science-based, net zero target.”

Now, as a former O&G man myself, I may not be the most impartial net-zero observer. But asking the largest pipeline in North America to work to “develop, communicate, and implement a decarbonisation strategy” seems a little much. What’s next, asking Philip Morris to work towards a net-zero cigarette target?

It’s only about halfway through the proxy season and it’s all starting to get a little old. I’m thinking I should either come up with a shorter heuristic—or sell some of my stocks.

Michael Flack blogs at He’s a former naval officer and 20-year veteran of the oil and gas industry. Now retired, Mike enjoys traveling, blogging and spreadsheets. Check out his earlier articles.

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