Juniper Networks ($JNPR) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/22/2012. Voting ends 5/21 on Moxy Vote’s proxy voting platform, which had five recommendations “from good causes,” including two consolidations, when I checked and voted on 5/19. ProxyDemocracy.org had four funds voting. I voted with management 62% 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.
JNPR’s SummaryCompensation Table shows that Kevin R. Johnson, CEO, was the highest paid named executive officer (NEO) at about $10.7M in 2011. I’m using Yahoo! Finance to determine market cap and Wikipedia’s rule of thumb regarding classification. According to those sources, at about $9B JNPR is at the high end of mid-cap companies. 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 JNPR’s pay is above that median.
All of the funds reported through Moxy Vote and ProxyDemocracy.org, except CalSTRS, voted against the compensation plan. Most also voted against amending the omnibus stock plan. I voted against the plans and also make it a practice to vote against compensation committee members, as well: Stensrud, Lawrie and Schlotterbeck. Since JNPR has a classified board, only Stensrud is running. Fortunately, JNPR’s board wisely put a proposal on the proxy to declassify the board.
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:
For a stockholder proposal to be considered for inclusion in Juniper Networks’ proxy statement for the 2013 annual meeting, the written proposal must be received by the Corporate Secretary of Juniper Networks at our principal executive offices no later than December 11, 2012. If the date of the 2013 annual meeting is moved more than 30 days before or after the anniversary date of the 2012 annual meeting, the deadline for inclusion of proposals in Juniper Networks’ proxy statement for the 2013 annual meeting is instead a reasonable time before Juniper Networks begins to print and mail its proxy materials for the 2013 annual meeting. Such proposals also will need to comply with SEC regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Proposals should be addressed to:
Juniper Networks, Inc.
ATTN: Corporate Secretary
1194 North Mathilda Avenue
Sunnyvale, CA 94089
Fax: (408) 745-2100
According to SharkRepellent.net, only about 24% of S&P 400 mid-caps require supermajority votes to approve mergers, so a proposal next year to remove supermajority requirements may be something to consider. Time to push good standards down to smaller companies. Other possibilities are allowing shareowners to call special meetings or act by written consent.
|NUM.||PROPOSAL||How I Voted|
|1.1||Elect Director Mercedes Johnson||For|
|1.2||Elect Director Scott Kriens||For|
|1.3||Elect Director William R. Stensrud||Withhold|
|3||Amend Omnibus Stock Plan||Against|
|4||Amend Qualified Employee Stock Purchase Plan||For|
|5||Declassify the Board of Directors||For|
|6||Advisory Vote to Ratify Named Executive Officers’ Compensation||Against|