2018 Engagement Case Study:
WHEB takes a strict approach to the independence of Board Directors. We believe that after ten years as a Board Director, they should no longer be considered independent. Non-independent Directors can continue to serve, but only where they are in a minority to independent Directors.
Governance – Independent Board Directors
To encourage the Board to increase the proportion of independent non-executive Directors on the Board to greater than 50% from the current 50%.
Scope and process
MSA Safety Inc. currently has a staggered Board where shareholders are only able to vote for a proportion of the Directors at each Annual General Meeting (AGM). In 2018, one Director, John Ryan III was up for re-election. The company (and the New York Stock Exchange listing requirements) considers Mr Ryan to be independent as he retired from being the company’s CEO over ten years ago. WHEB’s view is that Mr. Ryan is not independent on the basis that he has served on the company’s Board for 37 years. Mr Ryan, along with four other Board Directors, has served for more than ten years meaning that only 50% of Board Directors are independent. Furthermore, Mr. Ryan also serves as a Member of both the Nominations and Governance Committees meaning that these two committees are also only 50% independent. Consequently, we voted against his reappointment at the company’s AGM.
We wrote to the company explaining why we voted against Mr. Ryan and they responded to say that as Mr. Ryan is considered independent by the NYSE and by the company, he would remain on the Board.
Outcome: Partially Successful
As the company disagrees with our definition of independence, Mr Ryan remains a Board Director at the company. We will continue to encourage the company to adopt a stricter interpretation of independence and work to have a Board that is more than 50% independent according to this definition.