AutoNation set for shareholder vote on changes
Proposal asks to separate chairman and CEO roles to improve accountability
Mike Jackson holds three titles at Fort Lauderdale-based AutoNation: Chairman, CEO and president. But on April 19, shareholders are set to consider splitting the chair and CEO positions.
At AutoNation’s annual meeting, shareholders are scheduled to vote whether the board should adopt a policy to require that the board’s chairperson be an independent board member.
The proposal was made by California-based shareholder John Chevedden, who has owned stock in AutoNation since 2000. He’s a prolific sponsor of shareholder proposals at the nation’s largest companies. In an interview this week, Chevedden said he has fought for the shareholders to have the right to call a special meeting, to annually elect directors and to have a “say on pay” — an advisory vote on executive compensation — now an SEC rule.
Chevedden said an independent chairperson at AutoNation “would make the company more accountable to shareholders.”
The nation’s largest auto retailer is “doing OK” under Jackson’s leadership, he said, but it seems like Jackson “has a blank check.”
“There’s room for improvement. There are a lot of shortcomings in the makeup of the board,” Chevedden said.
He points to the long tenure of some board members and says some newer directors don’t own stock in AutoNation. “One way to address a weak board is to have an independent board chairman,” he said.
In its proxy statement filed with regulators, AutoNation recommends shareholders vote against the proposal, saying the company already has a lead independent director — Michael Larson, who also is chief investment officer for multibillionaire Bill Gates, co-founder of Microsoft and AutoNation’s largest stockholder.
AutoNation’s stock is mostly owned by big shareholders: 21 percent is owned by Gates, and nearly 17 percent is owned by Eddie Lampert, CEO of Sears, and his hedge fund. Other stockholders of more than 5 percent are institutional investors including Capital Research Global Investors, BlackRock, The Vanguard Group and Artisan Partners Limited Partnership, according to AutoNation’s annual (10-K) filing with the SEC.
The AutoNation board said it already has the flexibility to separate or combine the roles of chairman and CEO, should it choose to do so.
In its proxy, AutoNation said Chevedden, who has made shareholder proposals to the company in previous years, has not presented them at annual meetings himself. Instead, a representative of the International Association of Machinists and Aerospace Workers union did so on his behalf.
Chevedden has filed AutoNation shareholder proposals “every year from 2006 to 2016, except 2014. No proposal last year,” said Marc Cannon, spokesman for AutoNation.
AutoNation’s proxy also stated: “The machinists have been attempting to organize automotive dealership service technicians, including some of ours, for many years.”
The union confirmed this week that it represents workers in AutoNation’s repair shops in Orlando and in Southern California.
Chevedden, 72, said he has no connection with the Machinists’ union but often needs a representative to present a shareholder proposal in person, which is the rule. The activist said he has a dozen shareholder proposals on ballots this proxy season and can’t attend all those annual meetings across the country.