Biogen: How I Voted – Proxy Score 63

Biogen Idec (BIIB)($BIIB) is one of the stocks in my portfolio. Their annual meeting is coming up on 6/8/2012. Voting ends on 6/7 at Moxy Vote’s proxy voting platform, which had 6 recommendations “from good causes,” including 2 consolidations, when I checked and voted on 6/5. ProxyDemocracy.org had 6 funds voting.  I voted with management 63% of the time.

I generally vote against pay packages where NEOs were paid above median in the previous year but make exceptions where something obviously warrants different treatment. 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), aggregate compensation by public companies to NEO increased from 5 percent in 1993-1995 to about 10 percent in 2001-2003.

Few firms want to admit to having average executives. 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. We need to slow the pace of money going to the 1% if our economy is not to become third-world.

BIIB’s SummaryCompensation Table (p. 38) shows George A. Scangos, CEO, was the highest paid named executive officer (NEO) at about $11.3M 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 $31.7B WMT 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 at mid-cap corporations was $10.8 million in 2010, so CTSH’s pay is above that median.

On that basis, I voted against the pay plan and compensation committee members:  Robert W. Pangia (Chair), Alexander J. Denner, Eric K. Rowinsky, and Lynn Schenk.

With regard to proposals, I voted against making Delaware the exclusive forum. I reviewed the rationale of Rich Koppes of voting in favor of a measure at Chevron to move away from Delaware as an exclusive forum. Would it lead to more wasteful lawsuits? In many respects, it was the opposite of what is being requested here. However, in some respects it is similar in asking for shareowners to trust management. Have they been moving in the right direction, as Koppes asked of Chevron?

I like the fact that BIIB let their poison pill expire several years ago, has annual elections for all directors and maintains a majority vote requirement. Plus I like the fact they are submitting a provision substantially already in the articles of incorporation to a shareowner vote. I was on the line. In such cases, I look to see how others are voting. Since every investor announcing their vote at both Moxy Vote.com and ProxyDemocracy.org, I deferred to their judgement and voted against the measure. Yes, I sometimes feel like a lemming but expected this is an issue CalSTRS and others who voted against it have weighed carefully.

I vote in favor of the measure allowing those representing 25% of shares to call a special meeting. While this heads in the right direction, I’d like to see the threshold come down to 10%.

In all other matters, I voted as recommended by management.

Mark your calendars; here’s the deadline for proposals by shareowners for next year:

Stockholder proposals submitted pursuant to Securities Exchange Act Rule 14a-8 and intended to be presented at our 2013 annual meeting of stockholders must be received by our Secretary no later than December 28, 2012 to be eligible for inclusion in our proxy statement and form of proxy relating to that meeting.

Proxy Items McRitchie’s Vote
1 ELECTION OF DIRECTOR: CAROLINE D. DORSA
2 ELECTION OF DIRECTOR: STELIOS PAPADOPOULOS
3 ELECTION OF DIRECTOR: GEORGE A. SCANGOS
4 ELECTION OF DIRECTOR: LYNN SCHENK
5 ELECTION OF DIRECTOR: ALEXANDER J. DENNER
6 ELECTION OF DIRECTOR: NANCY L. LEAMING
7 ELECTION OF DIRECTOR: RICHARD C. MULLIGAN
8 ELECTION OF DIRECTOR: ROBERT W. PANGIA
9 ELECTION OF DIRECTOR: BRIAN S. POSNER
10 ELECTION OF DIRECTOR: ERIC K. ROWINSKY
11 ELECTION OF DIRECTOR: STEPHEN A. SHERWIN
12 ELECTION OF DIRECTOR: WILLIAM D. YOUNG
13 TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS BIOGEN IDEC S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2012.
14 SAY ON PAY – AN ADVISORY VOTE ON EXECUTIVE COMPENSATION.
15 TO APPROVE AN AMENDMENT TO BIOGEN IDEC S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION ESTABLISHING DELAWARE AS EXCLUSIVE FORUM FOR CERTAIN DISPUTES.
16 TO APPROVE AN AMENDMENT TO BIOGEN IDEC S SECOND AMENDED AND RESTATED BYLAWS PERMITTING HOLDERS OF AT LEAST 25% OF COMMON STOCK TO CALL SPECIAL MEETINGS.

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