Waste Connections ($WCN) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/18/2012. Voting ends 5/17 on Moxy Vote’s proxy voting platform, which had no recommendations when I checked and voted on 5/15. ProxyDemocracy.org had only 1 fund voting but it was CalSTRS, one of my favorites. I voted with management 67% 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.
WCN’s SummaryCompensation Table shows that Ronald J. Mittelstaedt, CEO & Chair was the highest paid named executive officer (NEO) at about $3.1M in 2011. I’m using Yahoo! Finance to determine market cap and Wikipedia’s rule of thumb regarding classification. According to those sources, WCN is a mid-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 $4.3 million in 2010, so WCN’s pay is below median. The company is also near the bottom of mid-caps, so pay may be a little high but I’ll follow CalSTRS on this one and vote in favor of directors and pay package.
With regard to shareowner proposals. Of course, I voted in favor of James McRitchie’s (that me) proposal to adopt a simple majority voting standard. Shareowners are generally willing to pay a higher price for companies without such entrenchment devices. Repealing supermajority requirements is simply good governance. According to SharkRepellent.net, only 30% of the S&P 500 have supermajority requirements to amend bylaws. That rises to 37% for the S&P 400 mid-caps. WCN is out of step.
I also voted in favor of the Teamster’s proposal to adopt a policy that the Board’s chairman be an independent director. I will always vote for such proposals, since a chairman who is also the CEO can properly lead an evaluation of their own performance.
On all other proxy items (confirm the auditor), 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 materials, stockholder proposals must be in writing and be received by the Secretary of Waste Connections, at the address set forth on the first page of this proxy statement, no later than the close of business (Central Standard Time) on December 6, 2012.
I’m likely to file a proposal to declassify the board next year. According to SharkRepellent.net, only 21% of the S&P 500 have classified boards while 46% of S&P 400 mid-caps do. Time to push good standards down to smaller companies.