Hain Celestial ($HAIN): How I Voted – Proxy Score 8%

Hain Celestial Group ($HAIN) is one of the stocks in my portfolio. Their annual meeting is coming up on 11/15/2012. ProxyDemocracy.org had collected the votes of two funds when I voted on 11/8/2012.  I voted with management 8% of the time.  View Proxy Statement. Warning: Be sure to vote each item on the proxy. Any items left blank will be voted in favor of management’s recommendations. (See Don’t Let Companies Change Shareholders’ Blank Votes)

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.

HAIN’s SummaryCompensation Table shows Irwin D. Simon, Chair and Chief Executive Officer, was the highest paid named executive officer (NEO) at about $9.3M in fiscal 2012. I’m using Yahoo! Finance to determine market cap and Wikipedia’s rule of thumb regarding classification. According to those sources, at about $2.7B HAIN is a mi-cap company. According to the United States Proxy Exchange (USPX) guidelines (pages 9 & 10), using data from Equilar, the median CEO compensation at large-cap corporations was $4.3 million in 2010.


Allowing for inflation of 6.1%, that would bring adjusted median income up to almost $4.6M, so HAIN’s pay is substantially above that median. I realize CEO pay is increasing faster than inflation, but I’m trying to hold the line, since I think most have been overpaid for years. In the case of HAIN it isn’t at all close, so it makes sense to vote against the compensation plan and against amending the stock plan. It is my policy to vote against the members of the compensation committee when I vote against the compensation plan, since they are the ones recommending it. Therefore I voted against Richard C. Berke (Chairperson), Jack Futterman, David Schechter, and Lawrence S. Zilavy.

Aside from the pay itself, I’m also concerned that three executives, including Simon, have agreements in place that would award them three times their annual salary and bonus if they are terminated following a change in control.

I also voted against Irwin D. Simon, since I don’t think CEOs should also serve on their board. As I understand, HAIN does not even have a lead director. It is so difficult to view the board as independent that I decided to join CBIS and Trillium in voting against the entire board.

How I Voted; see below under CorpGov.net:

1.1Elect Director Irwin D. SimonWithholdWithholdWithhold
1.2Elect Director Richard C. BerkeWithholdWithholdWithhold
1.3Elect Director Jack FuttermanWithholdWithholdWithhold
1.4Elect Director Marina HahnWithholdWithholdWithhold
1.5Elect Director Andrew R. HeyerWithholdWithholdWithhold
1.6Elect Director Brett IcahnWithholdWithholdWithhold
1.7Elect Director Roger MeltzerWithholdWithholdWithhold
1.8Elect Director Scott M. O’NeilWithholdWithholdWithhold
1.9Elect Director David SchechterWithholdWithholdWithhold
1.10Elect Director Lawrence S. ZilavyWithholdWithholdWithhold
2Advisory Vote to Ratify NEO CompAgainstForAgainst
3Amend Omnibus Stock PlanAgainstAgainstAgainst
4Ratify AuditorsForAgainstFor


Looking at SharekRepellent.net for possible corporate governance improvements for next year. I see the Board is authorized to increase or decrease the size of the board without shareholder approval. That seems like something that could potentially be abused. See my post, Cisco: How I Voted – Proxy Score 83%for a discussion of that issue and for the more significant issue of splitting the CEO and chair positions.

Other potential issues include their plurality, rather than majority, voting standard for electing directors. More than 80% of the S&P 500 use a majority standard. Almost half of mid-caps have also adopted a majority standard. HAIN should be a leader, not a laggard.  Note them on your calendar, here is the deadline for submission of proxy proposals for next year:

Stockholder proposals intended to be included in the Proxy Statement relating to our 2013 Annual Meeting of Stockholders pursuant to Rule 14a-8 under the Exchange Act (“ Rule 14a-8 ”) must be in writing addressed to the Corporate Secretary of the Company and delivered to the Corporate Secretary at our principal executive offices, no later than June 7, 2013, and must otherwise comply with Rule 14a-8.

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