Home Depot ($HD) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/17/2012. Voting ends 5/16 on Moxy Vote’s proxy voting platform, which listed 10 “good causes,” but four were consolidations, when I checked and voted on 5/14. ProxyDemocracy.org had only 1 fund voting. I voted with management 86% of the time.
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.
HD’s SummaryCompensation Table shows that Francis S. Blake, CEO & Chair was the highest paid named executive officer (NEO) at amost $10.8M in 2011. I’m using Yahoo! Finance to determine market cap and Wikipedia’s rule of thumb regarding classification. According to those sources, HD is a large-cap company. 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 HD’s pay is about median.
With regard to shareowner proposals. I voted in favor of NorthStar Asset Management’s say-on-political contributions policy. I think it is an important measure in light of Citizens United and have also supported it at other companies. Calvert and the Unitarians also vote in favor. Says NorthStar CEO Julie Goodridge:
We all know that corporate political contributions have come under tremendous scrutiny of late. Unfortunately, the contributions of the Home Depot corporation and their political action committee have historically violated Home Depot’s own publicly stated values. As a fiduciary, I am concerned that these misaligned decisions will continue and diminish shareholder value unless we implement stakeholder oversight.
I also voted in favor of John Chevedden’s proposal to allow shareowner action by written consent, removing the requirement that a percentage of shares ask for a record date to be set and that all shareholders must be solicited. Those impediments would make such action next to impossible and should never have been ignored by ISS the last time around. Calvert and the Unitarians also voted in favor.
I also voted in favor of Kenneth Steiner’s proposal on special shareholder meetings, to reduce the threshold for such actions from 25% to 15%. Calvert and the Unitarians also voted in favor.
On all other proxy items I voted as recommended by management.
Mark your calendars; here’s the deadline for proposals by shareowners for next year:
To be considered for inclusion in next year’s Proxy Statement and form of proxy, proposals by shareholders for business to be considered at the 2013 Annual Meeting of Shareholders must be submitted in writing by December 3, 2012 and must comply with the requirements of SEC Rule 14a-8. Proposals should be submitted to: Corporate Secretary, The Home Depot, Inc., 2455 Paces Ferry Road, N.W., Building C-22, Atlanta, Georgia 30339.
And here’s how I actually voted, using Moxy Vote’s proxy voting platform.
|ELECTION OF DIRECTOR: F. DUANE ACKERMAN|
|ELECTION OF DIRECTOR: FRANCIS S. BLAKE|
|ELECTION OF DIRECTOR: ARI BOUSBIB|
|ELECTION OF DIRECTOR: GREGORY D. BRENNEMAN|
|ELECTION OF DIRECTOR: J. FRANK BROWN|
|ELECTION OF DIRECTOR: ALBERT P. CAREY|
|ELECTION OF DIRECTOR: ARMANDO CODINA|
|ELECTION OF DIRECTOR: BONNIE G. HILL|
|ELECTION OF DIRECTOR: KAREN L. KATEN|
|ELECTION OF DIRECTOR: RONALD L. SARGENT|
|PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP|
|ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION|
|APPROVAL OF AN AMENDMENT TO THE COMPANY S EMPLOYEE STOCK PURCHASE PLAN TO INCREASE THE NUMBER OF RESERVED SHARES|
|SHAREHOLDER PROPOSAL REGARDING ADVISORY VOTE ON POLITICAL CONTRIBUTIONS|
|SHAREHOLDER PROPOSAL REGARDING EMPLOYMENT DIVERSITY REPORT|
|SHAREHOLDER PROPOSAL REGARDING REMOVAL OF PROCEDURAL SAFEGUARDS FROM SHAREHOLDER WRITTEN CONSENT RIGHT|
|SHAREHOLDER PROPOSAL REGARDING SPECIAL SHAREHOLDER MEETINGS|
|SHAREHOLDER PROPOSAL REGARDING CHARITABLE CONTRIBUTIONS|
|SHAREHOLDER PROPOSAL REGARDING STORMWATER MANAGEMENT POLICY|