Annual Meeting •  Voting Instruction Form

Elect Directors - Company Nominees

The election or re-election of members of the Board of Directors to serve either a term of one year or staggered terms of two or three years.

The company’s proxy statement will provide the nominee’s name, position with the company (if applicable), principal occupation, age, year in which the candidate first became a director of the company, board committees on which he or she serves as well as beneficial share ownership.
In most companies, directors are elected by a plurality of the company’s voting shares In the election of directors, in a single resolution or separate, and assuming a quorum is present at the meeting, shareholders may vote for the nominee or withhold their vote electing nominees by a plurality of the company’s voting shares. . This means that the director nominee with the most affirmative votes for a particular slot is elected for that slot.  Since directors generally run unopposed, the election of the board’s nominees is virtually assured.  In recent years, however, companies have introduced Majority Voting in the election of board members. Shareholders may vote FOR, AGAINST or, ABSTAIN.  
If cumulative voting is permitted, shareholders may cast all of their votes for a single individual. Candidates receiving the greatest number of votes cast by eligible holders will be elected to the board of directors.
In companies that provide for annual election of directors, the incumbent board nominates a slate of directors to serve until the next annual meeting. A classified board structure divides the board into two or three classes with each class to serve a term of two or three years. Under most such arrangements, there are three classes of directors, elected for staggered three-year terms. Thus, in any given year, only one of the three classes of directors must stand for re-election. Proponents of the classified board structure believe that a classified board assures continuity of service on the board and allows directors to acquire in-depth experience in the company’s affairs.
In some jurisdictions other than the United States or Canada, publicly listed companies will have a dual- structured board. This is a corporate system where two separate boards are used to monitor and guide a company. Under a typical dual structure the Supervisory Board, comprised usually of Independent or Outside Directors is responsible for strategy and oversight/supervision of management, while the Management or Executive Board comprised of senior executives usually appointed by the Supervisory Board, is responsible for daily management and tactical issues.

Ratify Appointment of Independent Auditors

Ratification of the appointment of the company’s independent auditors endorses the Audit Committee’s selection of the firm that will audit the company’s financials for the fiscal year.

The federal securities laws require that the annual financial statements of all public companies be audited by an independent auditor.  Generally, the independent auditor is selected by the board of directors.  Although most states do not require that the board’s choice be ratified by shareholders, many companies ask their shareholders to do so.  

Compensation Policy

The compensation or remuneration policy is usually defined by the board’s compensation committee and outlines how executives are compensated.

When the Combined Code for Best Corporate Governance Practice was introduced in the United Kingdom several years ago, it recommended that resident enterprises present their remuneration policy to shareholders for approval at the annual meeting. While the Code provides that such presentation need not be a standard agenda item, companies are presenting the policy to their shareholders albeit on an infrequent basis.  

The compensation programs, as a general rule, are established for corporate executive directors and senior executives and include base salaries, annual and long-term incentive remuneration. Incentive compensation is designed in large part to be tied to the achievement of specific, quantifiable performance objectives to align executives' financial rewards with those of independent shareholders. While such information is disclosed in the proxy material of North American corporations as required by the SEC regulations, this is a relatively new element introduced in the annual report of UK companies.  

In other jurisdictions, moreover, companies will seek shareholder approval of a proposed compensation system linked to the share value. While common in the United States, stock-based compensation has been introduced by foreign firms only recently. To date, however, few details on the proposed programs are provided in their proxy materials and local law often permits the grant of option awards at less than market value.

The international financial markets, however, are tightening the rules on executive compensation paid by publicly listed companies.

In January of 2011, the Securities and Exchange Commission in Washington, D.C. adopted rules concerning shareholder approval of executive compensation and "golden parachute" compensation arrangements as required under the Dodd-Frank Wall Street Reform and Consumer Protection Act passed by Congress in the previous year. The shareholder vote is on an advisory or non-binding basis.

The SEC's rules specify that say-on-pay votes required under the Dodd-Frank Act must occur at least once every three years beginning with the first annual shareholders' meeting taking place on or after Jan. 21, 2011. Companies also are required to hold a "frequency" vote on an advisory, non-binding basis, at least once every six years in order to allow shareholders to decide how often they would like to be presented with the say-on-pay vote.

Under the SEC's new rules, companies also are required to provide additional disclosure regarding "golden parachute" compensation arrangements with certain executive officers in connection with merger transactions triggered by a change in control proviso. This is submitted as a resolution for which the vote is on an advisory or non-binding basis.

The issue of executive compensation has been on the forefront of corporate governance discussion around the world in the past few years. Israel is no exception. In previous years there was a significant rise of executive compensation in public companies that cannot be explained or linked to the companies’ performance.


The 2012 amendment to the Israeli Companies Law regarding executive compensation in public companies was drafted due to a concern in the ownership structure and the need to safeguard minority rights. The compensation policy recommended by the compensation committee is to be approved by the board and then, before it takes effect, by the general meeting in a non-binding vote. If the majority of the minority shareholders do not approve the policy, the policy will be returned for further deliberation by the board, taking into account the rejection of the policy by the minority shareholders. The board may ultimately approve the policy despite the minority’s disapproval, if it finds that the policy is in the company’s best interest.

Regulatory authorities in Australia have also imposed a requirement for a compensation policy resolution to be approved by shareholders. Although voting on the adoption of the remuneration policy is advisory and non-binding, Australia has introduced a provision that if at least 25% of the votes cast are against the adoption of the Remuneration Report at two consecutive AGMs (each year’s votes being considered a Strike), then at the second consecutive AGM at which a Strike occurs (Second Strike), a resolution must be put to Shareholders calling for an additional general meeting (Further Meeting) where each Director (excluding the Managing Director) is nominated for reelection, yclept a Spill Resolution which if passed means the company must convene a Further Meeting within 90 days of the Split Resolution.

Articles of Incorporation - Routine Business

Routine business involving changes to the articles or certificate of incorporation covers technical amendments or the deletion of outdated references in the charter.

Occasionally, a company’s charter or bylaws will require certain technical amendments that do not affect any substantive rights of shareholders, but are dictated by good corporate practice.  This process is sometimes referred to as “corporate housekeeping.”  Although these technical changes may take many forms, one example is the removal from the charter of references to classes of preferred stock that may have long since been redeemed or retired.  Another common technical change is to update references to any state statute that may have been repealed or renumbered.

Shareholder Proposal - Socially Responsible Related

Socially responsible shareholder proposals request or recommend changes in the corporate philosophy that combine ethical or environmental goals with financial ones.

The SEC adopted its rule governing shareholder resolutions in response to the experiences of the legendary corporate gadflies Lewis and John Gilbert.  In 1932, Lewis Gilbert, a shareholder of Consolidated Gas Company, was denied permission to pose questions to management at the company’s annual meeting.  The Gilberts’ travails over the next several years culminated in the SEC’s adoption of Rule 14a-8 in 1942.  That rule addresses when a company must include a shareholder’s proposal and a supporting statement in its proxy material. Under a few specific circumstances, the company is permitted to exclude a shareholder proposal, but only after submitting its reasons to the SEC.  The binding effect of shareholder proposals is an open question.  Many state corporation laws state that the affairs of the corporation shall be managed by its board of directors.  Relying on that language, corporate managers argue that the implementation of a shareholder resolution opposed by the board would abrogate the board’s duty to manage.  In some cases, companies have declined to adopt shareholder resolutions that received a majority of votes at the company’s annual meeting.  For this reason, many shareholder resolutions are in the form of “requests” to the board to take a certain action.  

Some shareholder resolutions seek to have the company act in a manner that the proponents consider to be socially responsible and to avoid conduct that they consider to be anti-social.  Thus, for example, socially active shareholders may request management to avoid actions that damage the environment; hire independent monitors to assure that the company’s products are not manufactured under sweatshop conditions; assure equal opportunity in hiring and diversity of the workforce; restrict the advertising and sale of harmful products such as tobacco or fast food; forgive third world debt; discontinue doing business with countries having repressive regimes; and discontinue or limit sales of weapons and defense-related products.  In response, corporate managements may cite their commitment to ethical behavior and may call attention to the company’s existing programs that address these concerns.

Transact Other Business - Nonvoting

Other business covers items that are not on the official agenda of a shareholder meeting but could occur.

'Prior to any shareholders meeting, shareholders must be provided with an agenda indicating the items to be voted on at the meeting.  Many companies, after enumerating the issues to be considered, will add a catch-all provision to the agenda that would allow the meeting to “transact any other business.”  In some cases, shareholders are asked to vote on that provision, that is, to approve or disapprove it; while in the majority of cases, no vote is requested, and the provision appears merely as notice that other matters may be considered and voted upon.  Most authorities believe that these clauses do not give management carte blanche to ambush shareholders with measures that they would never have approved had they known they would be voted upon at the meeting.  Rather, the “other business” provision, if used at all, could allow management to remedy technical defects in the items considered without the necessity of convening another meeting of shareholders.