GILEAD SCIENCES, INC. | Independent Board Chair at Gilead Sciences, Inc.

Status
34.57% votes in favour
AGM date
Previous AGM date
Proposal number
4
Resolution details
Company ticker
GILD
Lead filer
United Church Funds
Co-filers
Miller Howard Investments, Mercy Investment Services, Inc.
Resolution ask
Amend board structure
ESG theme
  • Governance
ESG sub-theme
  • CEO / chair duality
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Health Care
Company HQ country
United States
Resolved clause
Gilead Sciences ("Gilead" or the "Company") shareholders request the Board of Directors adopt as policy (the "Policy"), and amend the bylaws as necessary, to require henceforth that the Chair of the Board of Directors, whenever possible, be an independent member of the board. The Policy shall apply prospectively so as not to violate any contractual obligations. If the board determines that a Chair who was independent when selected is no longer independent, the board shall select a new Chair who satisfies the requirements of the policy within a reasonable amount of time. Compliance with this policy is waived if no independent director is available and willing to serve as Chair.
Supporting statement
We believe our board of directors should be chaired by an independent director. A chair is better positioned to represent shareholder interests when the role is held by a director that is independent of corporate management. The Company's recent performance relative to peers as well as controversies involving the pricing of its products makes this an opportune time to adopt a policy requiring an independent director serve as board chair. At our Company, the CEO Daniel O'Day also serves as Chairman of the Board. Shareholders manifested opposition to Gilead's executive pay at the 2020 annual general meeting, where 16.3% voted against the advisory vote on executive compensation. Proxy advisor ISS found a misalignment in pay for performance with Gilead underperforming its peer group on a one, three and five year basis while compensating its CEO well above the peer median.

On September 23, 2020, the Department of Justice reported that Gilead agreed to pay $97 million to resolve allegations that it violated the False Claims Act by paying kickbacks. Eleven State Treasurers have questioned Gilead on price gouging on its Remdesivir anti-viral during a global pandemic.

The current Lead Independent Director, Kevin Lofton, is not a sufficient substitute for an independent Chair. Mr. Lofton appears overstretched with directorships at two other Fortune 500 companies (Rite Aid and Medtronic) and several non-profit boards. We also question Mr. Lofton's independence after serving on the board for over 11 years.

An independent chair is a fundamental corporate governance best practice and is preferred by many investors. ISS reported in September 2020 that 85 percent of investors responding to its policy survey indicated that an independent chair is their preferred model. Thirty-four percent of S&P 500 boards have an independent chair, according to a 2019 Spencer Stuart report, up from 31 percent the previous year. The Council of Institutional Investors' corporate governance policies favor independent board chairs. A similar proposal filed with Gilead last year saw significant support with a vote in favor of 43.39%.

In order to ensure that our Board can provide rigorous oversight for our Company with greater independence and accountability, we urge a vote FOR this shareholder proposal.

How other organisations have declared their voting intentions

Organisation name Declared voting intentions Rationale
Pathfinder Asset Management For An independent chair is better able to oversee the executives of a company and set a pro-shareholder agenda
Kutxabank Gestion SGIIC SAU. For
KBI Global Investors For
Boston Partners Global Investors, Inc. For
Universities Superannuation Scheme - USS For USS strongly supports the appointment of an independent Chairman
Aktia Bank p.l.c. For

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