With effect from March 1, 2018, Massachusetts Financial Services Company ("MFS") implemented changes to its global proxy voting policies. The policy updates relate to: board diversity; director overboarding and say on pay. The changes are summarized below.

Adopted a​​ Policy on Board Diversity

MFS has adopted a new policy on board diversity. Specifically, the guidelines provide that the company "will generally vote against the chair of the nominating and governance committee at any U.S. company whose board is comprised of less than 10% female directors." In determining its final voting decision, MFS may consider any progress that a company may be making to increase its board diversity. In this context, a company with less than 10% female representation on its board may, therefore, benefit from disclosing in its proxy statement any board diversity policy it may have adopted and any efforts it may be undertaking to add female directors. MFS also identified board diversity – "specifically diversity of thought and the refreshment process" as one of its 2018 engagement priorities.1

As we noted in our previous Georgeson reports SSGA's 2018 Proxy Voting Policy Updates and BlackRock Asks Companies to Deliver Social Value and Sustainable, Long-term Financial Growth, the issue of board diversity is increasingly becoming part of institutional investor voting policy guidelines. In our view, this greater institutional focus should, over time, accelerate the rate of growth in female board representation.

Reduced the Total Number of Acceptable Board​​s Under its Overboarded Policy

Under its updated policy, MFS has reduced the total number of boards from five to four for a non-CEO director, and from three to two for a director who also serves as CEO of a public company.

Given this change, companies should review the total number of boards on which its directors serve, especially in cases involving CEOs of public companies. Earlier this year, BlackRock similarly changed its voting guidelines relative to the total number of allowable boards for CEOs of public companies. Moreover, MFS's policy on CEOs is similar to the proxy advisory firm Glass Lewis's (GL) policy. However, the GL policy applies to all executive officers, not just CEOs.

Expanded the Section on Say on Pay

MFS has expanded its discussion relating to portfolio company compensation practices under its policy guidelines on say on pay. The added language states that MFS will vote against a portfolio company's say on pay if the company's pay practices include performance metrics or plan structures that, in MFS's view, are poorly-aligned with the long-term interests of shareholders.

MFS's updated 2018 U.S. Proxy Voting Policies can be accessed at https://www.mfs.com/wps/portal/mfs/us-investor/p​roxy-policy#b


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1 MFS 2018 Proxy Season Preview:​ Proxy Policies Update & Engagement Priorities​