As part of regular discussions with management and the board, one of our investment managers engaged with one of their portfolio companies regarding two separate issues: compensation and shareholder voting standards.
Our manager was concerned that the firm's compensation committee could re-price or exchange underwater equity options as this could undermine the existing executive compensation policy and did not align management's and shareholders' interests. The manager communicated to the firm its concerns around this issue and the decision not to support the incentive plan put forward by the firm. This was followed by a face to face meeting, where the firm acknowledged the concern and offered to review their policy.
The firm also has a supermajority voting requirement (66.6%) to amend certain articles and bylaws. The firm received shareholder proposals requesting the removal of this supermajority at recent annual general meetings. The manager supported this resolution as simple majority voting is seen as best practice and it ensures better board accountability.