Allegiant board will return intact; investors reject proposal to curb executive pay

An Allegiant Air jet takes off from McCarran International Airport on Friday, Aug. 26, 2011.

Allegiant Air investors have re-elected the carrier’s entire board of directors and rejected a proposal to curb executive pay, thwarting labor groups that wanted to shake up the Las Vegas airline’s corporate governance.

At the company’s annual shareholders meeting today at its Summerlin headquarters, executives announced that all six board members of parent Allegiant Travel Co. were picked to serve another year.

Their elections were far from unanimous. Linda Marvin, chairwoman of the audit committee, got “yes” votes from investors representing about 10.3 million of Allegiant’s roughly 17 million shares, by far the fewest of any board member, while investors representing 5.7 million shares withheld their votes for her, by far the most.

Board member John Redmond got approvals from investors representing about 14.5 million shares, the second-fewest, while those holding 1.5 million shares withheld their votes for him, the second-highest tally, according to a securities filing.

CtW Investment Group, a union-affiliated corporate-governance activist firm, had asked Allegiant shareholders to vote out half the board — Marvin, Redmond and Gary Ellmer.

Those three have close ties to Allegiant chairman and CEO Maurice “Maury” Gallagher and, as members of the audit committee, have approved multimillion-dollar contracts with outside businesses that Gallagher controls or partially owns.

According to CtW, the trio has displayed a "collective failure to guard against” the “poor use” of company money.

Meanwhile, investors also defeated a proposal by the Teamsters union that Allegiant no longer accelerate stock payments under certain circumstances for senior executives who have quit or been fired.

Roughly 56 percent of investors voted against the plan, with about 44 percent in favor, said Jude Bricker, senior vice president of planning.

Despite the unions’ setbacks, labor activists had a presence at Allegiant’s headquarters today. Roughly 20 people were picketing outside the offices this morning to support Allegiant flight attendants, who voted to join the Transport Workers Union in late 2010 but still do not have a collective bargaining agreement with the ultra-low-cost carrier.

The Teamsters — who represent Allegiant pilots and called for an aviators strike in April that was blocked by the courts — were “encouraged” by the level of investor support for the executive-pay proposal, said Daniel Willett, corporate research analyst with the Teamsters and who attended today’s meeting.

Click to enlarge photo

Members of the Transport Workers Union picket in front of Allegiant Air's Summerlin headquarters Thursday, June 18, 2015 in Las Vegas to support Allegiant's flight attendants, who do not have a collective bargaining agreement with the airline.

The union had taken aim at Allegiant’s $8.5 million payout to former president and chief operating officer Andrew Levy after his resignation last fall. The Teamsters, when making their proposal, said they do “not question that some form of severance payment may be appropriate” when a top executive leaves. But, they said, they’re concerned that Allegiant “may permit windfall awards that have nothing to do with an executive’s performance.”

Allegiant’s board had asked shareholders to vote against it. Institutional Shareholder Services, a corporate-governance advisory firm, recommended approval.

CtW targeted Marvin, a former Allegiant chief financial officer; Redmond, who owns real estate with Gallagher; and Ellmer, who, according to CtW, worked with Gallagher at the former WestAir Commuter Airlines. Gallagher was a principal owner and executive at the carrier in the 1980s and early ’90s.

ISS recommended that shareholders re-elect every board member except Marvin.

Unlike today’s vote, most board members at U.S. publicly traded companies get near-unanimous approval. Last year, directors with the 3,000 largest U.S. public companies received an average approval tally of at least 96 percent, according to CtW, citing data from the Council of Institutional Investors.

Allegiant’s audit committee is tasked with giving independent oversight of airline finances. Among other things, it oversees outside auditors, monitors financial reporting and approves contracts worth at least $125,000 with companies owned or partially owned by major Allegiant investors, board members or top executives, or their immediate families.

Having a company’s former CFO on the panel “should not happen,” said Michael Pryce-Jones, director of corporate governance at Washington, D.C.-based CtW.

Marvin, for one, has “approved questionable deals” with Gallagher’s side ventures and “revealed (her) lack of independence and objectivity,” he said.

Asked to comment on his remarks, the airline said "the issues raised by CtW are merely tactics of the (Teamsters) that distract from our ongoing efforts to reach a contract agreement" with Allegiant's pilots. "Despite the claims made by CtW, today our shareholders voted to reconfirm all of the members of our board of directors."

The pilots voted in August 2012 to join Teamsters Local 1224 but still do not have a collective bargaining agreement under the union.

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