Independent Board Chair

Resolution Text

Gilead Independent Board Chair

 

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.

 

Supporting Statement

 

We believe:

  • The role of the CEO and management is to run the company.
  • The role of the Board is to provide independent oversight of management and the CEO.
  • There is a potential conflict of interest for a CEO to have a non-independent director act as Chair.

 

In November 2019, the U.S. government sued Gilead for infringement of patents. The cost of PrEP treatment – Gilead’s Truvada and Descovy products taken daily – is up to $20,000 per year. PrEP is an integral part of global HIV prevention and the Company’s pricing may impede these efforts. Negative media attention surrounding this lawsuit presents challenges for the Company.

 

Concerns about these risks have led to growing investor interest in the Company’s governance practices. In our view, shareholders are best served by an independent board Chair who can provide a balance of power between the CEO and the board. The board is responsible for overseeing management, and conflicts of interest may arise when one person holds both the Chair and CEO positions. We believe that Gilead’s board should adopt best practice governance policies, including having an independent board chair.

 

As of October 2018, 50% of companies in the S&P 500 have separated the CEO and Chair roles. Numerous institutional investors recommend such a separation. For example, California’s Retirement System CalPERS’ Principles & Guidelines encourage separation, even with a lead director in place. The Council of Institutional Investors’ corporate governance policies favor independent board chairs.

 

In order to ensure that our board can provide rigorous oversight for our Company and management with greater independence and accountability, we urge a vote FOR this shareholder proposal.

Lead Filer

Kathryn McCloskey
United Church Funds

Co-filer

Judy Byron
Adrian Dominican Sisters
Sr. Tonette Sperando
Benedictine Sisters, Sacred Heart Monastery of Cullman, Alabama
Kate Monahan
Friends Fiduciary Corporation
Donna Meyer
Mercy Investment Services