How I Voted: MSCI – Proxy Score 100%

MSCI ($MSCI) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/1/2013. had collected the votes of only one fund when I checked on 4/25/2013, so I also took a quick look at OTPP’s vote.  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 are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime)

I generally vote against pay packages where NEOs were paid above median in the previous year but make exceptions if warranted. According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay), aggregate compensation by public companies to NEOs increased from 5 percent of earnings in 1993-1995 to about 10 percent in 2001-2003.

Few firms admit to having average executives. They generally set compensation at 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.

MSCI’s Summary Compensation Table shows CEO/Chair Henry A. Fernandez was the highest paid named executive officer (NEO) at about $6M in 2012. I’m using Yahoo! Finance to determine market cap ($4B) and Wikipedia’s rule of thumb regarding classification. MSCI 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 large-cap corporations was $4.3 million in 2010.

MSCI’s pay is below median, especially if we factor inflation. However, I’m not happy with the combined CEO/Chair and that the Board has no formal CEO employment agreement, nor has it established a formal clawback policy regarding executive incentive pay. I would have voted against Scott Sipprelle, since he was on the board for five years without owning shares in our company, but he didn’t stand for re-election.

How I voted (CorpGov) below:

1.1Elect Director Benjamin F. duPontForFor
1.2Elect Director Henry A. FernandezForFor
1.3Elect Director Alice W. HandyForFor
1.4Elect Director Catherine R. KinneyForFor
1.5Elect Director Linda H. RieflerForFor
1.6Elect Director George W. SigulerForFor
1.7Elect Director Patrick TierneyForFor
1.8Elect Director Rodolphe M. ValleeForFor
2Advisory Vote to Ratify Named Executive Officers’ CompensationForFor
3Ratify AuditorsForFor
Mark your calendar:

Shareholders intending to present a proposal at the 2014 annual meeting of shareholders and have it included in our Proxy Statement for that meeting must submit the proposal in writing to Corporate Secretary, Gary Retelny, MSCI Inc., 7 World Trade Center, 250 Greenwich Street, 49th Floor, New York, New York 10007. We must receive the proposal no later than November 19, 2013.

 Looking at, I see no action can be taken by written consent, shareowners cannot call special meetings and it takes a supermajority vote of 80% to amend certain charter and all bylaw provisions. American Express Company’s ISS Governance QuickScore as of Apr 1, 2013 is 3. The pillar scores are Audit: 1; Board: 7; Shareholder Rights: 4; Compensation: 4. Brought to you by Institutional Shareholder Services (ISS). Scores range from “1” (low governance risk) to “10” (higher governance risk). Each of the pillar scores for Audit, Board, Shareholder Rights and Compensation, are based on specific company disclosure.

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