Dell: How I Voted – Proxy Score 67

Dell ($DELL) is one of the stocks in my portfolio. Their annual meeting is coming up on 7/13/2012. Voting ends 7/12 on Moxy Vote’s proxy voting platform, which had 0 recommendations “from good causes” when I checked and voted on 7/10/2012. ProxyDemocracy.org had information on 6 funds voting.  I voted with management 67% 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.

Dell’s SummaryCompensation Table shows Michael S. Dell, Chair and CEO, was the highest paid named executive officer (NEO) at over $16M 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 $22B DELL 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 small-cap corporations was $10.8 million in 2010, so DELL’s pay is above that median.

On that basis, I voted against the pay plan and against the compensation committee members: Shantanu Narayen, William H. Gray, III, and Gerald J. Kleinstrlee. I also voted against the omnibus stock plan.

 Checking with SharkRepellent.net, I see no action can be taken by the written consent of shareowners and a special meeting requires a 50% thresholds. Those issues and others could be addressed in future proposals. Mark your calendars; here’s the deadline for proposals by shareowners for next year:

In accordance with Dell’s Bylaws, a stockholder who desires to present a proposal for consideration at next year’s annual meeting, but not for inclusion in next year’s proxy statement, must submit the proposal no later than the close of business on May 13, 2013. The submission should contain the information specified in the Bylaws, including the proposal and a brief statement of the reasons for the proposal, the name and address of the stockholder (as they appear in Dell’s stock transfer records), the number of Dell shares beneficially owned by the stockholder, and a description of any material direct or indirect financial or other interest that the stockholder (or any affiliate or associate) may have in the proposal.

Proposals should be addressed to Corporate Secretary, Dell Inc., One Dell Way, Mail Stop RR1-33, Round Rock, Texas 78682. Inclusion in Next Year’s Proxy Statement — A stockholder who wishes to present a proposal for inclusion in next year’s proxy statement pursuant to Rule 14a-8 under the Exchange Act must deliver the proposal to Dell’s principal executive offices no later than the close of business on January 30, 2013. Submissions should be addressed to Corporate Secretary, Dell Inc., One Dell Way, Mail Stop RR1-33, Round Rock, Texas 78682, and should comply with the requirements of Rule 14a-8. 6.

Since MoxyVote.com had already announced they are shutting down at the end of the month (Sad News: Moxy Vote is Closing), I decided to vote on Broadridge’s  ProxyVote.com platform. That was one of the problems with MoxyVote’s business model. Every time we voted on the MoxyVote.com voting platform, they had to pay a fee to Broadridge, which has a near monopoly on facilitating retail shareowner voting.  Disclosure: Broadridge is part of my portfolio. We tried to get the SEC to end that monopoly, but as you can imagine, their plate is full and it is difficult to make such changes. More on all of this in another post.

Here’s how I actually voted, in comparison to those reported on ProxyDemocracy.org. My vote is in parentheses.

1 Elect Director James W. Breyer 5 – 1 (Yes)
2 Elect Director Donald J. Carty 3 – 3 (Yes)
3 Elect Director Janet F. Clark 5 – 1 (Yes)
4 Elect Director Laura Conigliaro 5 – 1 (Yes)
5 Elect Director Michael S. Dell 3 – 3 (Yes)
6 Elect Director Kenneth M. Duberstein 5 – 1 (Yes)
7 Elect Director William H. Gray, III 4 – 2 (No)
8 Elect Director Gerard J. Kleisterlee 5 – 1 (No)
9 Elect Director Klaus S. Luft 4 – 2 (Yes)
10 Elect Director Alex J. Mandl 4 – 2 (Yes)
11 Elect Director Shantanu Narayen 4 – 2 (No)
12 Elect Director H. Ross Perot, Jr. 4 – 2 (Yes)
13 Ratify Auditors 4 – 2 (Yes)
14 Advisory Vote to Ratify Named Executive Officers’ Compensation 4 – 2 (No)
15 Approve Omnibus Stock Plan 2 – 4 (No)

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