Neuberger Berman to Vote for Shareholder Proposal Regarding Right to Call a Special Meeting at Nuance Communications, INC. (NUAN)
Alex Samuelson, 212 476 5392, Alexander.Samuelson@nb.com
New York, February 22, 2018 — Neuberger Berman has been a long-term holder of Nuance Communications, Inc., owning shares on behalf of our clients for over five years, and has engaged with the Board of Directors to help drive changes that Portfolio Managers believe could lead to long-term value creation.
In a public letter issued on December 12, 2017, we expressed our concerns as to the process and transparency of the CEO succession plan, as well as the company’s corporate governance practices.
We note that today, 14 months after CEO Paul Ricci announced his retirement and only a few weeks before he is about to retire, shareholders have not received any meaningful update about the CEO succession, and a new CEO has not been announced. We remain concerned as to the Nuance Board’s ability to execute the announced CEO succession plan, and the departing CEO’s influence on the process.
We believe that the shareholders’ right to call a special meeting – a proposal that appears on the ballot for the upcoming annual meeting of shareholders – will allow shareholders to act in case the Board fails to execute on the succession plan and prevent a delay of the decision for another year.
Moreover, we strongly believe that it is a fundamental shareholder right to call a special meeting, a belief we have publicly codified in our Governance and Proxy Voting Guidelines where we state our general support for shareholder or management proposals granting these rights.1 Our view is supported by organizations like the Council of Institutional Investors, representing over $25 trillion in assets under management.2 This corporate governance best practice has been adopted by a majority of Russell 1000 companies.3
The proposal is especially important for Nuance shareholders, given the absence of a right to act by written consent or a majority vote, a history of poison pill adoption, and several years of poor support for Board proposals at shareholder meetings. We note that the Board has chosen not to issue a recommendation on this shareholder proposal, which we see as a positive step in improving the Company’s overall governance profile.
Both Glass Lewis and ISS have voiced support for the proposal, which ISS noted would “help to increase accountability of the board and management” and quoted our above-referenced letter as an indication of concern.4 We agree with the proxy advisors’ assessment and are hopeful about the potential for positive change.
For all of those reasons, Neuberger Berman intends to vote FOR the shareholder proposal.
We hope and expect the proposal will receive significant support from shareholders, and that the Board will follow the proponent’s statement and promptly adopt the right unilaterally. We appreciate the changes Nuance has already implemented, and look forward to a continuing dialogue with the Board of Directors.
For context and information on past Neuberger Berman actions regarding Nuance, please click here.
About Neuberger Berman
Neuberger Berman, founded in 1939, is a private, independent, employee-owned investment manager. The firm manages a range of strategies—including equity, fixed income, quantitative and multi-asset class, private equity and hedge funds—on behalf of institutions, advisors and individual investors globally. With offices in 20 countries, Neuberger Berman’s team is approximately 1,900 professionals. For five consecutive years, the company has been named to Pensions & Investments Best Places to Work in Money Management survey (among those with 1,000 employees or more). Tenured, stable and long-term in focus, the firm fosters an investment culture of fundamental research and independent thinking. It manages $295 billion in client assets as of December 31, 2017. For more information, please visit our website at www.nb.com.