Dow Chemical (DOW) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/10/2012. Voting ends 5/9 on Moxy Vote’s proxy voting platform, which listed four “good causes,” including two consolidations, when I checked and voted on 5/7. ProxyDemocracy.org had two funds voting. DOW scores 44 out of 100, since I voted with management on only 44% of the proxy.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.
DOW’s SummaryCompensation Table shows that James R. Young, CEO & Chair was the highest paid named executive officer (NEO) at over $19M in 2011. I’m using Yahoo! Finance to determine market cap and Wikipedia’s rule of thumb regarding classification. According to those sources, 3M is a Large-cap. According to the United States Proxy Exchange (USPX) guidelines (pages 9&10), using data from Equilar, the median CEO compensation for large-cap corporations was $10.8 million in 2010, so DOW’s pay is above that median.
I voted against the pay package and against amending the stock plan to provide bonuses. I also voted against the members of the compensation committee (D. H. Reilley, J. K. Barton, J. B. Hess, P. Polman, and R. G. Shaw). I rejected the omnibus stock plan, since that would support further payments to overpaid executives. Additionally, I voted against Ringler, primarily because CalSTRS voted against him.
I voted in favor of the ESOP for employees. They shouldn’t suffer for the sins of the board and executives. I also voted in favor of item #6 in favor of an independent chair from Kenneth Steiner and #7 in favor of written consent from William Steiner. Both are proposals in support of good governance.
On other matters, I voted with management.
Here’s the deadline for proposals by shareowners for next year:
Under the Company’s Bylaws, if you wish to raise items of proper business at an annual meeting, other than stockholder proposals presented under Rule 14a-8 for inclusion in the Company’s proxy materials, you must give advance written notification to the Corporate Secretary. For the 2013 Annual Meeting, written notice must be given between the close of business on November 30, 2012, and the close of business on January 29, 2013. However, different deadlines apply if the annual meeting is called for a date that is not within 30 days before or after the anniversary of the prior year’s annual meeting. Such notices must comply with the procedural and content requirements of the Bylaws. A copy of the Bylaws may be found on the Company’s website atwww.DowGovernance.com. Alternatively one will be sent without charge to any stockholder who sends a written request to the Corporate Secretary.
And here’s how I actually voted, using Moxy Vote’s proxy voting platform.
|ELECTION OF DIRECTOR: ARNOLD A. ALLEMANG|
|ELECTION OF DIRECTOR: JACQUELINE K. BARTON|
|ELECTION OF DIRECTOR: JAMES A. BELL|
|ELECTION OF DIRECTOR: JEFF M. FETTIG|
|ELECTION OF DIRECTOR: JOHN B. HESS|
|ELECTION OF DIRECTOR: ANDREW N. LIVERIS|
|ELECTION OF DIRECTOR: PAUL POLMAN|
|ELECTION OF DIRECTOR: DENNIS H. REILLEY|
|ELECTION OF DIRECTOR: JAMES M. RINGLER|
|ELECTION OF DIRECTOR: RUTH G. SHAW|
|RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.|
|ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION.|
|APPROVAL OF THE 2012 STOCK INCENTIVE PLAN.|
|APPROVAL OF THE 2012 EMPLOYEE STOCK PURCHASE PLAN.|
|STOCKHOLDER PROPOSAL ON SHAREHOLDER ACTION BY WRITTEN CONSENT.|
|STOCKHOLDER PROPOSAL ON INDEPENDENT BOARD CHAIRMAN.|