DOMINO'S PIZZA, INC. | Requirement for an Independent Board Chair at DOMINO'S PIZZA, INC.

Status
Filed
AGM date
Previous AGM date
Proposal number
5
Resolution details
Company ticker
DPZ
Lead filer
The Accountability Board
Resolution ask
Adopt or amend a policy
ESG theme
  • Governance
ESG sub-theme
  • Independent board
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Consumer Discretionary
Company HQ country
United States
Resolved clause
Shareholders ask the Board to adopt a policy, and amend the bylaws accordingly, to require any Board Chair to be independent. The policy may provide that if a Chair at any time ceases to be independent, he or she shall be replaced with an independent one; that compliance with this policy is waived if no independent director is available and willing to serve as Chair; and that the policy shall apply prospectively so as not to violate any legal obligation existing at its adoption.
Supporting statement
DEAR FELLOW SHAREHOLDERS: Domino’s 2020 and 2021 proxy statements called having an independent Board Chair one of its “corporate governance highlights” and cited it as an example of its “strong corporate governance practices” that provide a “framework within which our Board of Directors and management can pursue the strategic objectives of the Company and ensure long-term growth for the benefit of our shareholders.” But in early 2022, Domino’s suddenly made its Chair a company employee, creating the new top Board position of Executive Chair. The company’s share price plunged throughout 2022 and to date, has yet to return to the highs it reached in 2021. Indeed, the graph below from Domino’s 10-K for fiscal 2024 shows a concerning Total Shareholder Return (TSR) in comparison to both the S&P 500 and S&P 1500 Restaurant indices. img256328768_55.jpg Looking ahead, we believe an independent Chair would better serve shareholders. Of course, we’re aware that Domino’s has a separate CEO, and that when it made its Chair an employed executive, it appointed a Presiding (lead independent) Director. But in our view, the Presiding Director position lacks robust responsibilities and meaningful oversight authority. Plus, given the above performance concerns, the new structure has obviously been an insufficient safeguard of shareholder value. An independent Chair, on the other hand, would improve delineation between Board oversight and the executive operating decisions of the company, and provide a governance framework within which our Board and management can pursue strategic objectives and ensure long-term growth for the benefit of shareholders. Indeed, “the chair of the board should ideally be an independent director,” reports Institutional Shareholder Services (ISS), “to help provide appropriate counterbalance to executive management.” Similarly, Glass Lewis says “shareholders are better served when the board is led by an independent chair.” Especially considering the performance concerns outlined above, we think the time is clearly right for shareholders to seek greater independent oversight. Thank you.

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