Alan Johnson, CEO at compensation consultancy Johnson Associates, believes it’s clear that Argo’s corporate governance changes are the direct result of a proxy contest led by Voce Capital…

Shareholders’ concerns over Argo’s pay design were likely due to the fact that its LTIP plan was an outlier. Indeed, Johnson is surprised that Argo didn’t already have a three-year period in place for measuring its long-term metrics.

“That’s pretty standard,” he says. “Their performance goals weren’t hard enough in their long term.”
While Johnson acknowledges it isn’t common for companies to announce corporate governance changes this early on prior to their next fiscal year, in this case, he says, “it’s certainly reasonable,” since Argo might want to avoid another proxy fight in 2020 or signal to shareholders “we are responsible.”
Johnson says these are two small measures from Argo to shareholders to show “we listened, we heard you.” However, he warns that shareholders shouldn’t ignore the other concerns Voce voiced in its proxy fight, because he says, “I can’t imagine in the proxy fight, they were talking to investors and these were the only two things they were told to do.”

Agenda Week / September 12, 2019