May 16 2024
Dear fellow shareholders
I am writing to you in connection with the forthcoming Annual General Meeting (AGM) of the shareholders of [TECO Ltd] (TECO, or The Company), to be held on 24 May 2024.
My name is Eugene Huang. I am the leader of FutureTECO, a group of concerned TECO shareholders who have put forward a vision for modernisation of TECO’s strategy and sustainable performance, and are proposing a slate of 8 candidates for election at the Company’s AGM next week.
Several weeks ago we distributed our detailed pitch deck directly to shareholders and proxy advisers including Glass Lewis, and have also made it available publicly on our campaign website. For ease of reference our pitch deck and associated campaign material can be located here.
As a subscriber to Glass Lewis & Co. proxy voting research, you will likely have just received a report today containing recommendations AGAINST election of the FutureTECO candidates and in favour of all 11 candidates proposed by the incumbent Board. This report was a re-publication of an earlier voting report issued by Glass Lewis just 2 days earlier, which had in fact recommended investors vote FOR 6 of the 8 FutureTECO candidates as well as 9 of the 11 management candidates.
Glass Lewis’s revised recommendations – issued barely a week before the AGM and two business days before the vote-cutoff for non-Taiwanese institutional investors, with no engagement, and containing an unexplained reversal of their own previously-published research – are utterly prejudicial to the FutureTECO campaign and what has been a very measured, respectful and public campaign by FutureTECO over the past several months.
Whilst I am clearly disappointed about this situation, I am very conscious that as a voting decision-maker in a major institutional investment firm, you will now be in the invidious position of having to quickly weigh Glass Lewis’s revised recommendations against your own stewardship policies, along with any engagement you may have had with TECO’s management regarding the AGM proposals.
In this context, I am writing to you directly request your urgent and careful consideration of FutureTECO’s case, and why I believe you should support our candidates notwithstanding Glass Lewis’s ill-considered recommendations.
The timing squeeze – you have our sympathy!
The revised Glass Lewis report was issued today, Thursday 16 May (although, misleadingly, page 2 of their revised report cites last Monday 13 May as the “explanation for republication” date). Their original report, now retracted, was first accessible on Glass Lewis Viewpoint platform on Monday 13 May local time in Asia.
In both cases, the timing was very deep into the AGM Notice period for the AGM to be held on 24 May. And in the case of the revised report issued today – quite ridiculously so, given the subsequent pressure this places on the various parties to the AGM, investors, research subscribers, custodians and other services providers.
Glass Lewis’s shaky voting recommendation rationale
On behalf of the FutureTECO group, I must take strong exception to the statement in the revised Glass Lewis report that we have produced “limited and broadly framed details” and lacked communication of “tangible intentions for the company… [to] offer unaffiliated comprehensive, contextualized analytics or detailed plans for TECO”. As noted above, full details of our campaign have been available in the public domain since April 2024.
Our campaign website is not restricted in its accessibility in any way, and is anchored by a comprehensive slide deck comprising some 70 pages, which contains an extremely thorough, evidence-based rationale for FutureTECO’s reform campaign, numerous clear examples and case studies, verified performance data and peer comparisons, and detailed explanation of the credentials, experience, diversity profile and skills of our proposed candidates and how they will navigate TECO’s future strategy and competitive challenges in the interests of delivering sustainable, long-term shareholder value.
The opening pages of our pitch deck also state quite clearly the intended tone of our campaign as a measured, targeted one aimed at enhancing the skills matrix and forward-thinking capabilities on the Board, not as some form of “winner takes all”, adversarial activism contest.
This slide deck was sent directly to TECO’s domestic and international institutional shareholders and proxy advisers including Glass Lewis, with an open invitation to engage further and/or get back to us with any questions.
There has been no engagement, no follow-up questions, and no serious analysis of what our campaign is actually arguing or presenting as supporting evidence from Glass Lewis.
Yet, amazingly, Glass Lewis appears to have taken at face value some bald assertions made by TECO’s incumbent management in a pitch deck that was not disclosed publicly or shared with the FutureTECO Group, casting completely unsubstantiated aspersions on the skills, capacity, commitment and capabilities of our director nominees – for example, the comments on p. 10 relaying points about alleged shortcoming s of individual director candidates that are evidently made in the (non-public) management deck.
On behalf of the FutureTECO group, I categorically reject these personal and professional slights from the management camp, and their unreflecting adoption by a supposedly rigorous and expert independent research provider in Glass Lewis.
One further key point to highlight is that Glass Lewis’s original research report had recommended AGAINST two of the management-nominated candidates (TUNG Chao-Chin and CHEN Hui-Yiu) on the grounds of being over-boarded. The revised report issued today now recommends FOR election of those same two candidates. How can this be?
In summary, as an investor who actually commits your own clients’ and beneficiaries’ resources to pay for this research, I hope that you are as shocked as I am at the lack of rigour, balance and analysis that is demonstrated by Glass Lewis’s revised voting recommendation report.
Your vote is important
Based on all of the above, I now strongly urge you to overturn Glass Lewis’s revised voting recommendation and vote FOR the FutureTECO candidates.
For ease of reference, the relevant individuals and ballot items numbers are included below:
3.8 Li-Chong Huang – Executive Director
3.9 Chih-Yuan Hou – Executive Director
3.10 Song-Ren Fang – Executive Director
3.11 Liang-Chien Chen – Executive Director
3.16 Yu-Hsuan Wu – Independent Director
3.17 Ming-Shiuan Lee – Independent Director
3.18 Chao-Ching Huang – Independent Director
3.19 Po-Min Yang – Independent Director
If under your internal proxy voting guidelines you are not prepared to support the entire slate of FutureTECO candidates, I recognise that it is open to you to vote for a blended combination of FutureTECO and management candidates, utilising the cumulative voting framework that applies to Taiwanese listed companies.
Whilst we would of course like to see all eight of our candidates elected, there is no need for you as investors to necessarily adopt an ‘all or nothing’ voting approach if you believe there can be an appropriate balance between the competing factors in play. If you are exploring options along these lines, I would urge you to consider the overall board skills matrix criteria discussed in Slides 57-64 of our presentation. I would also encourage you to consider the Board diversity factors in play – in particular the age diversity of the respective candidates spelt out on Slide 65 of our deck, in addition to broader gender diversity, educational and professional experience factors.
Engagement Outreach
I appreciate that, with Glass Lewis’s report being published extremely late into the notice of meeting period, you will need to finalise your voting decision within the next few days in order to meet very tight custodian and registry vote cut-off deadlines.
To this end, aside from asking you to consider the points raised in this letter, I would very much appreciate the opportunity to engage with you directly between now and the vote cut-off date of next Tuesday 21 May. I will actively prioritise this engagement request and do my best to fit in with whichever timing and format best suits you. Please contact my solicitation advisers Georgeson: Savoy Lee (savoy.lee@georgeson.com) to make the necessary arrangements.
I very much look forward to your favourable consideration of this letter and the opportunity to discuss with you directly.
Yours sincerely,
Eugene Huang