On Thursday, March 9, Applied Materials Inc. (NASDAQ: AMAT) will hold its annual shareholders’ meeting in Santa Clara, California, beginning at 11:00 a.m.
At such meetings, shareholders are routinely asked to vote for board members, on executive compensation and to ratify the appointment of a company’s independent auditing firm. The vote on executive compensation is typically advisory only.
Applied Materials’ shareholders also are being asked, among other things, to vote on two shareholder proposals. Both are related to the governance part of the environmental, social, and governance (ESG) spectrum.
The first would give a group of shareholders with a combined stake of 10% in the company’s outstanding shares the power to call a special shareholders meeting. In the proxy materials filed with the U.S. Securities and Exchange Commission, the proposal’s sponsor noted that following a vote granting shareholders the right to act by written consent (instead of limiting the right to meetings), the company devised a form of written consent “that is so difficult to use that a group of shareholders, who see an urgent need to have a vote on an important item between annual meetings, would automatically choose to call for a special shareholder meeting because it is less difficult than attempting to act by written consent.” The company’s board recommends a vote against the proposal. A similar proposal last year garnered nearly 315 million votes in favor, losing to 344.5 million votes against.
A second shareholder proposal would require the company’s executive compensation program to include a CEO pay ratio factor. According to the proposal, Applied’s board increased the CEO’s pay ratio from 204 to 1 in 2021 to 323 to 1 in 2022. The board also recommends a vote against this proposal, noting that similar proposals in 2021 and 2022 were defeated when 90% of votes cast rejected the deal.
Applied Materials develops and manufactures equipment, services and software for the semiconductor, display and related industries. The company employs about 33,000 people. When the company reported quarterly earnings last month, it beat the average earnings per share estimate by 5.73% and the consensus sales estimate by 1.25%. Early estimates of how the company will perform in the 2023 fiscal year that ends in October are not encouraging. Earnings per share are expected to be 8.6% lower than in fiscal 2022 and sales are pegged to drop by 3.9%. The stock is up more than 21% to date in 2023 and down 0.8% over the past 12 months.
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