Block, inc. | Independent Chair at Square, Inc.

Status
10.88% votes in favour
AGM date
Proposal number
4
Resolution details
Company ticker
SQ
Lead filer
State of New york - Office of the State Comptroller
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
Technology
Company HQ country
United States
Resolved clause
Shareholders of Square, Inc. (Square) urge the Board of Directors (Board) to take the steps necessary to adopt a policy to require that the Chairman of the Board shall be an independent member of the Board.
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. This policy should be implemented so as not to violate any contractual obligations, with amendments to Square's governing documents as needed.
Supporting statement
Square’s CEO Jack Dorsey serves both as CEO and Chair of Square’s Board of Directors. We believe the combination of these roles in a single person weakens a corporation's governance.·
Furthermore, Mr. Dorsey is currently a director and CEO of Twitter, Inc. As a part-time CEO at both companies and Chair of the Square Board, shareholders should be concerned with Mr. Dorsey's excessive outside commitments that could adversely impact his role as Chair of Square's Board.
A board, led by its chair, is responsible for protecting shareholders’ interests by providing oversight of management in directing the corporation’s affairs. This oversight function can be diminished when the chair is not an independent director, weakening a company’s governance structure.
While Square has appointed a lead independent director, the lead director’s duties are not robust and do not include duties like approval of Board meeting schedules and agendas, or approval of information sent to the Board. According to the Council of Institutional Investors: “[T]he CEO and chair roles should only be combined in very limited circumstances; in these situations ... it should name a lead independent director who should have approval over information flow to the board, meeting agendas and meeting schedules to ensure a structure that provides an appropriate balance between the powers of the CEO and those of the independent directors.”
Shareholders have serious concerns regarding the Board's oversight of governance issues, including Square's
•
classified board structure;
•
plurality voting standard;
•
lack of resignation policy if a director fails to receive sufficient support;

lack of well-established shareholder rights like the right to call special meetings, by written consent, or proxy access;
•
supermajority approval requirements for charter and bylaw amendments; and,
•
dual-class capital stock structure with unequal voting rights and are not subject to a sunset requirement.
By having an independent chair, Square would join peers like Paychex Inc., Global Payments Inc., Intuit Inc., and a majority of S&P 500 companies that have separated the Chair and CEO roles. An independent Chairman of the Board at Square could create a better governance structure, provide enhanced oversight and accountability of management, and provide independent leadership in addressing governance weaknesses.

How other organisations have declared their voting intentions

Organisation name Declared voting intentions Rationale
LocalTapiola Asset Management Ltd For According to international CG standards separate roles of CEO and chairman is considered best practice
Axiom Investors For
Universities Superannuation Scheme - USS For USS strongly supports the appointment of an independent Chairman.

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