UCF’s Director of Responsible Investing, Matthew Illian, presented the following remarks at the Gilead Sciences Corporation meeting of shareholders on May 4, 2022, regarding a shareholder resolution calling for an independent Board Chair. Currently, Daniel O’Day is both CEO and Board Chair of Gilead. Preliminary results suggest that this resolution received 40.4% of the vote, which is a strong vote from shareholders who too often support whatever management recommends but not strong enough to send a clear message to management that this policy should be immediately changed
Good morning, Mr. Chairman, members of the board, and fellow shareholders. My name is Matthew Illian, and on behalf of United Church Funds, I present Item No. 5 requesting that the Board adopt a policy such that the Chairperson of the Board of Directors be an independent director.
In 2005, 71% of companies in the S&P 500 had a dual CEO and Chair; today less than half maintain this combined role. Institutional investors and academics regularly assert that an independent chairman is best practice. Why is Gilead not adopting this practice? Pharmaceutical companies, which operate at the nexus of public health and private profits, face daily reputational and financial risks. Naming the CEO as Chair of the Board subordinates the insights of independent directors and puts the company at even greater risk.
One of the most important roles of the Board is to oversee and evaluate the CEO. After years of stock underperformance at Gilead, we need Board leadership that is empowered to make the best decisions for the long-term success of this firm.
Gilead should take this opportunity to strengthen its corporate governance as a means of addressing the needs of the Company’s shareholders, employees, customers and other stakeholders. A vote “FOR” Proposal No. 5, ensures that tough questions of strategy, governance and risk are being adequately discussed and independently overseen.
Thank you.
Resolution No. 5:
RESOLVED: Gilead Sciences (“Gilead” or the “Company”) shareholders request the Board of Directors adopt as policy (the “Policy”), and amend the bylaws as necessary, to require henceforth that the Chair of the Board of Directors, whenever possible, be an independent member of the Board. The Policy shall apply prospectively so as not to violate any contractual obligations. 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.