Georgeson summarized several noteworthy updates included in JP Morgan's April 2020 proxy voting guidelines:
- Compensation clawbacks - Votes generally will be withheld from board chairs, lead independent directors or Nom/Gov chairs where employees have departed due to a significant violation of code of conduct without a compensation clawback.
- Board diversity - JP Morgan will use its voting power to effect change where boards are "lagging" in gender and ethnic diversity. The investor believes diversity contributes to board effectiveness and thus expects companies to be committed to diversity & inclusiveness in their general recruitment policies as a matter of principle.
- Say-on-Pay - JP Morgan will withhold votes from select members of the Comp Committee where executive compensation seems excessive relative to peers and is not supported by long-term performance, or where it believes performance metrics & targets are not aligned with long-term shareholder value. This is in addition to its previous policy of withholding votes for the Comp Committee and/or voting against say-on-pay if the proposal received 60% or less support the prior year and the company failed to demonstrate active engagement with shareholders to address the issue as well as the specific actions taken to address the low level of support.
- Shareholder proposals to recoup bonuses - JP Morgan will vote for shareholder proposals to recoup unearned bonuses/incentive pay based on a restatement precipitated in significant part by fraud, misconduct or negligence, or individual misconduct or poor performance prior to the payout that - if known - would have thwarted the award.
As reported last week, JP Morgan was one of many institutional investors whose recently updated policies reflect greater expectations of portfolio companies concerning their board diversity. This post first appeared in the weekly Society Alert!
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