Proxy voting encourages corporations to align their business practices with our values and concerns. Addressing governance issues through proxy voting affirms the commitment of the Sisters of Mercy to justice and equality.
A company’s board of directors is responsible for representing the interests of shareholders. The board plays a key role in ensuring that a company’s practices are in accordance with long-term shareholder interests and that executive compensation aligns the interests of management and shareholders. We believe that diversity at the board of directors and top level of management influences company culture. We use our vote to promote structures that create and reinforce accountability.
- We oppose all nominees when a minimum of 25% of the board of directors is not inclusive of women and/or underrepresented persons.
- We withhold our vote for all nominees if the board does not include a majority of independent directors, and withhold votes for non-independent directors who sit on key committees such as the executive, audit and compensation committees.
- We support resolutions asking that all board members be elected annually.
- We support resolutions that seek to separate the positions of chair of the board and CEO.
- We support development of performance-based compensation plans that include a broad array of both financial and non-financial measures.
Reliability of financial statements is essential for shareholders to protect shareholder value, and auditors provide an impartial assessment of the company’s financial performance and financial strength. Audit committees are subject to enhanced regulations, and it is essential that they have enhanced oversight of the company’s independent auditors.
- We support resolutions calling for annual election of auditors.
Investors increasingly are questioning escalating executive compensation packages, including incentive plans, which sometimes appear to be misaligned with creation of shareholder value. Within the past few years, the Securities and Exchange Commission has required companies to disclose additional information about compensation and perquisites for top executives, and federal legislation has been considered that would require an annual opportunity for shareholders to vote on an advisory resolution, proposed by management, to ratify compensation of named executive officers and the accompanying narrative disclosure of material factors. We, as a matter of social justice, are also concerned with the significant rate of increase in executive compensation during the past 20 years relative to the rate of increase in compensation for workers, and that gap has increased tenfold.
- We support resolutions calling for the shareholder advisory vote on executive compensation and for appropriate disclosure of compensation practices.
- We support resolutions calling for management to issue a compensation and/or benefit equity report or for a report on the ratio between CEO and worker compensation.
- We support resolutions asking companies to review executive compensation as it links to nonfinancial performance, such as labor and human rights, environment, diversity and other social issues.
Mergers, acquisitions and corporate restructurings can increase concentration in industries, and may have a significant impact on company stakeholders, such as a loss of commerce in a local community, large employee layoffs and lack of benefit to the consumer. They also may have a potential impact on shareholder value. We will evaluate transactions on a case-by-case basis, given the potential negative impacts to stakeholder and shareholder value.
- We oppose the resolution when, in our judgment, one or more of the above effects seem likely.
Stock increases are designed to raise capital. They also may be used to implement compensation plans, to deter takeovers, or to protect present management. Stock splits attract investors as the price of the stock is reduced.
- We oppose any increase that is more than 50% or more than 2:1 and where the purpose is not stated or is for “unspecified future use.”
We support policies that apply transparency and accountability to corporate political giving, including to political campaigns, political action committees, social causes and government lobbying activities. Although companies are already required to disclose political contributions under federal and state laws, the filings and information are not readily available to shareholders who have a right to know how corporate assets are being deployed. In addition, political spending and corporate lobbying may undermine shareholder or stakeholder interests.
- We support resolutions asking disclosure of political contributions made with corporate funds either directly or through political action committees, trade associations and/or other advocacy associations.
