FactSet Research (FDS): How I Voted – Proxy Score 100%

FactSet Research Systems Inc. ($FDS) is one of the stocks in my portfolio. Their annual meeting is coming up tomorrow, on 12/18/2012. ProxyDemocracy.org had collected the votes of three funds when I voted on 12/14/2012.  I voted with management 100% 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, with 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.

FDS’s SummaryCompensation Table (page 28) shows CEO/Chair Philip A. Hadley was the highest paid named executive officer (NEO) at about $1.6M in 2012. I’m using Yahoo! Finance to determine market cap and Wikipedia’s rule of thumb regarding classification. According to those sources, at about $4.15B FDS is mid-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 $4.3 million in 2010.

Allowing for inflation of 6.1%, that would bring adjusted median income up to almost $4.56M, so FDS’s pay is substantially below that median.  On the flip-side, I don’t see that the board has executed a formal CEO employment agreement, established a formal clawback policy or adopted formal equity holding requirements. I voted in favor of the directors, pay package and the auditor.

1.1Elect Director Scott A. BilleadeauForWithholdWithholdFor
1.2Elect Director Philip A. HadleyForWithholdWithholdFor
1.3Elect Director Joseph R. ZimmelForWithholdWithholdFor
2Ratify AuditorsForForForFor
3Advisory Vote to Ratify Named Executive Officers’ CompensationForAgainstForFor

Get out your calendar. Here’s the deadline for submitting proxy proposals:

Proposals of stockholders intended to be presented at the 2013 Annual Meeting of Stockholders must be received by FactSet, attention of Ms. Rachel R. Stern, the Company’s Secretary, at its principal executive offices, no later than August 1, 2013, or such other date as determined with reference to the Company’s By-laws, as amended, as applicable, to be included in the 2013 Proxy Statement.

 Looking at FDS’ SharkRepellent.net for possible areas of reform, I note the following:

  • Classified board with staggered terms.
  • Plurality, rather than majority, vote standard to elect directors.
  • Action by written consent is essentially prohibited (high threshold).
  • Shareholders cannot call special meetings.
  • Supermajority requirements.


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