ROVI: How I Voted

Rovi Corporation (ROVI) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/1/2012. Voting ends 4/30 on Moxy Vote’s proxy voting platform, which listed no recommendations from “good causes” when I checked and voted on 4/27. ProxyDemocracy.org had only three funds voting.

I make it a practice to vote against pay packages where NEOs were paid above median in the previous year. Yes, I know, this is pretty crude analysis. I’ll make exceptions where something obviously warrants different treatment. However, I’m concerned that NEOs are taking a greater and greater portion of wealth generated by companies.

According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay. Oxford Review of Economic Policy, Vol. 21, Issue 2, pp. 283-303, 2005), the aggregate compensation paid by public companies to their top-five executives during the period 1993-2003 totaled about $350 billion, and the ratio of this aggregate top-five compensation to the aggregate earnings of these firms increased from 5 percent in 1993-1995 to about 10 percent in 2001-2003.

At the same time, few firms want to admit to having average executives, so they seek to compensate their executives at above-average levels. They survey executive compensation at corporations and then set compensation packages that are above average for their “peer group,” which is often chosen aspirationally. While the “Lake Woebegone effect” may be nice in fictional towns, “where all the children are above average,” it doesn’t work well for society to have all CEOs considered above average and their collective pay spiraling out of control.

ROVI’s SummaryCompensation Table (page 39) shows that Alfred J. Amoroso, Former President and CEO was the highest paid named executive officer (NEO) at about $11.6M in 2011. I’m using Yahoo! Finance to determine market cap and  Wikipedia’s rule of thumb regarding classification. According to those sources, ROVI is at the low end of midcaps. According to the United States Proxy Exchange (USPX) guidelines (pages 9&10) using data from Equilar, the median CEO compensation for mid-cap corporations was $4.3 million in 2010, so Amoroso’s pay is far above that median.  I voted to against the executive compensation and members of the compensation committee (James P. O’Shaughnessy, Andrew K. Ludwick, and James E. Meyer).

There were no shareowner proposals. For all other matters, I voted as recommended by management.

Here’s the deadline for proposals by shareowners for next year:

To be eligible for inclusion in our proxy statement and proxy materials, you must deliver a copy of your proposal to our Corporate Secretary at 2830 De La Cruz Boulevard, Santa Clara, California 95050 no later than November 16, 2012, which we believe is a reasonable time before we print and mail our proxy materials.

Here’s how I voted on Moxy Vote’s proxy voting platform:

Board Members My Vote
1 THOMAS CARSON
2 ALAN L. EARHART
3 ANDREW K. LUDWICK
4 JAMES E. MEYER
5 JAMES P. O’SHAUGHNESSY
6 RUTHANN QUINDLEN
Proxy Proposals My Vote
7 RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2012.
8 ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION.

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