UNFI: How I Voted

United Natural Foods Inc. (UNFI) is one of the stocks in my portfolio. Their annual meeting is coming up on December 13. Voting on MoxyVote.com‘s platform ends December 13. When I last looked, MoxyVote.com had recommendations from eleven “good causes,” which included five consolidations. ProxyDemocracy.org had two participating funds voting but you can see them both at the same time and that makes for easier comparisons.

UNFI’s SummaryCompensation Table shows that Steven L. Spinner, the combined CEO/Chairman, was the highest paid named executive officer (NEO) at a little over $3.7 million. According to the United States Proxy Exchange (USPX) guidelines, the median CEO compensation for mid-cap corporations was $4.3 million in 2010.

Since Spinner’s pay is below that amount and the stock gained 80% over the last three years compared with 60% for S&P 400 mid-caps, I am voting in favor of the pay plan.

The Teamsters have a shareowner proposal requesting the board adopt and disclose a written and detailed succession planning policy. They cite the NACD as identifying best practices and in finding that boards with successful CEO transitions are more likely to have well-developed succession plans in place well before a transition, are focused on developing internal candidates, and include clear candidate criteria and a formal assessment process. UNFI’s current Principles state:

The CEO reports to the Board periodically on succession planning and leadership development, and provides the Board with recommendations of potential successors. The CEO also makes available to the Board, on a continuing basis, recommendations regarding who should assume the position of CEO in the event that he/she becomes unable or unwilling to perform the duties of this position.

While it is good to have the CEO involved, succession planning is a board responsibility. The UNFI principles are geared toward who takes over in emergency but have little to say about real succession planning. Our company objects to the proposal, writing that for the report “to be meaningful to our stockholders, we would have to publicly disclose confidential and sensitive information such as our business strategy and outlook, our most promising internal candidates, any desirable external candidates.” The actual proposal says nothing about naming names or disclosing confidential information.  I concurred and voted in favor of the succession planning proposal.

On all other proxy items I voted with management.

Also of note: Any proposal that a stockholder wishes to be considered for inclusion in our proxy statement for the 2012 Annual Meeting of Stockholders must be submitted to our corporate secretary, Joseph J. Traficanti, at 313 Iron Horse Way, Providence, Rhode Island 02908, no later than the close of business on July 5, 2012.  Maybe I’ll put that date on my calendar.

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