UNION PACIFIC CORPORATION | Independent board chairman at Union Pacific Corporation

Status
20.45% votes in favour
AGM date
Previous AGM date
Proposal number
5
Resolution details
Company ticker
UNP
Lead filer
Individual
Resolution ask
Adopt or amend a policy
ESG theme
  • Governance
ESG sub-theme
  • CEO / chair duality
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Industrials
Company HQ country
United States
Resolved clause
Shareholders request that the Board of Directors adopt an enduring policy, and amend the governing documents as necessary in order that 2 separate people hold the office of the Chairman and the office of the CEO.
Whenever possible, the Chairman of the Board shall be an Independent Director.
The Board has the discretion to select a Temporary Chairman of the Board who is not an Independent Director to serve while the Board is seeking an Independent Chairman of the Board.
Supporting statement
The Board has the discretion to select a Temporary Chairman of the Board who is not an Independent Director to serve while the Board is seeking an Independent Chairman of the Board.
Although it is a best practice to adopt this policy soon this policy could be phased in when there is a contract renewal for our current CEO or for the next CEO transition.
This proposal topic won 52% support at Boeing and 54% support at Baxter International in 2020. Boeing then adopted this proposal topic. The roles of Chairman and CEO are fundamentally different and should be held by 2 directors, a CEO and a Chairman who is completely independent of the CEO and our company.
A Lead Director is no substitute for an independent Board Chairman. According to the Union Pacific annual meeting proxy the UNP Lead Directors lacks in having exclusive powers. For instance many of these powers are shared with others:
▪ Is one of the persons who can authorize the retention of consultants for the Board.
▪ Is one of the persons who is a liaison between the independent directors and the Chairman/CEO.
▪ Is one of the persons who can be available for consultation and communication with major shareholders but only as appropriate.
▪ Is involved with evaluating CEO pay which is already the responsibility of the Compensation Committee.
▪ Is involved with succession planning which is already the responsibility of the Nomination Committee.
▪ Is one of the persons who can assist the Board in compliance with the Company’s governance guidelines and policies.
▪ Does not have the power to call a special Board meeting.
▪ Is one of the persons who can help provide that only independent directors serve on key Board committees.
▪ Approves but does not initiate any flow of information to the Board.
▪ Approves but does not initiate the agenda, schedule and materials for Board meetings.
When the Lead Director shares roles with others it means that the Lead Director may need to do little or nothing in those roles in a given year.
Plus management fails to give shareholders enough information on this topic to make an informed decision. There is no comparison of the exclusive powers of the Office of Chairman and the exclusive powers of the Lead Director.

How other organisations have declared their voting intentions

Organisation nameDeclared voting intentionsRationale
Rothschild & co Asset ManagementFor

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