DaVita: How I Voted – Proxy Score 54

DaVita ($DVA) is one of the stocks in my portfolio. Their annual meeting is coming up on 6/11/2012. Voting ends 6/8 at 5 am ET on Moxy Vote’s proxy voting platform (early because of the weekend), which had 3 recommendations “from good causes” when I checked and voted on 6/6/2012. However, two were consolidations, so they really only had recommendations from Calvert. ProxyDemocracy.org had information on 4 funds voting.  I voted with management 54% 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.

DVA’s SummaryCompensation Table shows Kent J. Thiry, CEO/Chair, was the highest paid named executive officer (NEO) at over $17.5M 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 $8B DVA 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 at small-cap corporations was $4.3 million in 2010, so DVA’s pay is well above that median.

On that basis, I voted against the pay plan and would have voted against the compensation committee members: John M. Nehra (Chairman, Peter T. Grauer, and Roger J. Valine. CalSTRS did as well, so I’m in good company. However, I also voted against the omnibus stock plan, fearing much will go again to Nehra, instead of to the ESOP. Calvert, AFSCME and CBIS aso voted against the plan but CalSTRS voted in favor of it.

I also joined with the same three funds, voting in favor of my own proposal that senior executives retain a significant percentage of stock acquired through equity pay programs until one-year following the termination of their employment and to report to shareholders regarding this policy before our next annual shareholder meeting. Adopting such a practice would focus on the long-term.

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

If you wish to present a proposal for action at the 2013 annual meeting of stockholders and wish to have it included in the proxy statement and form of proxy that management will prepare, you must notify us no later than January 2, 2013 in the form required under the rules and regulations promulgated by the SEC. Otherwise, your proposal will not be included in management’s proxy materials.

Here’s how I actually voted using Moxy Vote’s proxy voting platform. I included how all announced funds voted, as displayed at ProxyDemocracy.orgWhat do you think?

NUM. PROPOSAL TEXT CorpGov.net CALVERT SOCIAL INDEX AFSCME CBIS CALSTRS
1 Elect Director Pamela M. Arway For For For For For
2 Elect Director Charles G. Berg For For For For For
3 Elect Director Carol Anthony (John) Davidson For For For For For
4 Elect Director Paul J. Diaz For For For For For
5 Elect Director Peter T. Grauer Against For Against For Against
6 Elect Director John M. Nehra Against For Against For Against
7 Elect Director William L. Roper For For Against For For
8 Elect Director Kent J. Thiry For For Against For For
9 Elect Director Roger J. Valine Against For For For Against
10 Ratify Auditors For For Against Against For
11 Advisory Vote to Ratify Named Executive Officers’ Compensation Against Against Against For Against
12 Amend Omnibus Stock Plan Against Against Against Against For
13 Stock Retention/Holding Period For For For For Against

, , , ,

Comments are closed.

Powered by WordPress. Designed by WooThemes