Magna International Inc. , long criticized for its corporate governance, is adopting several new policies that it says will make its practices more shareholder friendly.
“The changes adopted today underscore that the board continues to be responsive to and is fully aligned with shareholders interests,” said Magna chairman Mike Harris, who become a lightning rod for criticism of the company after the buyout of controlling shareholder and company founder Frank Stronach in 2010 at a cost of more than $800-million.
Mr. Harris led an independent committee of directors that examined the buyout but did not commission an independent evaluation of the deal to determine whether it was fair to minority shareholders. Neither he nor the two other directors on the committee, Louis Lataif and Donald Resnick, received a majority of votes from shareholders at the 2011 annual meeting, but were elected to the board because shareholders cannot vote against directors, but merely withhold their votes.
Among the changes Magna has adopted is an amendment that says the board will accept a resignation offered by a director for whom a majority of votes are withheld .
Another amendment to the policy enables shareholders to vote on executive compensation, another thorny area for Magna shareholders, especially when Mr. Stronach was chairman and received consulting contracts worth tens of millions of dollars annually.
At the 2012 annual meeting, Magna shareholders “will vote on an advisory resolution relating to the company’s approach to executive compensation,” the Aurora, Ont.-based auto parts giant said in a statement Tuesday.
In addition, Magna has engaged a search firm to seek out additional independent directors who will be nominated for election at the company’s annual meeting this year.
Stock options for independent directors will be eliminated, a formal policy of educating directors has been adopted and an outside adviser will help the board evaluate its own effectiveness in 2011.
Magna will also publicly disclose the number and percentage of votes cast on each matter that comes to a vote at a shareholders’ meeting.
Mr. Harris said in a statement that other shareholder-friendly actions taken by Magna’s board include several dividend increases, a share buyback program and several acquisitions.
Magna released the results of the vote for directors at the 2011 annual meeting after a lawsuit was filed by three institutional shareholders.