How I Voted: NCR – Proxy Score 12.5%

NCR ($NCR) is one of the stocks in my portfolio. Their annual meeting is coming up on 4/24/2013. had collected the votes of two funds when I checked on 4/21/2013.  I voted with management 12.5% 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 publiccompanies 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.

NCR’s SummaryCompensation Table (p. 44) shows CEO/Chair William R. Nuti was the highest paid named executive officer (NEO) at about $9.8M in 2012. I’m using Yahoo! Finance to determine market cap ($4.3B) and Wikipedia’s rule of thumb regarding classification. NCR 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 mid-cap corporations was $4.3 million in 2010.

Even factoring inflationNCR’s pay is above median. I voted against the compensation plan, the stock plan, and would have voted against all members of the compensation committee: Linda Fayne Levinson, Chair, Gary J. Daichendt, and Robert P. DeRodes. Unfortunately, NCR has a classified board, which I abhor, so I voted against all the directors.

I voted in favor of Florida SBA’s proposal to declassify the board. If you are only going to vote one item, this should be it. This is low-hanging fruit, supported by substantial academic research. Board members should be held accountable annually.  How I voted (CorpGov) below:

1.1Elect Director Edward ‘Pete’ BoykinWithholdWithholdFor
1.2Elect Director Linda Fayne LevinsonWithholdWithholdFor
1.3Elect Director Deanna W. OppenheimerWithholdWithholdFor
1.4Elect Director Kurt P. KuehnWithholdWithholdFor
2Ratify AuditorsForForFor
3NEO CompensationWithholdForFor
4Approve Omnibus Stock PlanAgainstAgainstFor
5Declassify the Board of DirectorsForForFor

Get ready for next year:

Stockholders interested in presenting a proposal for consideration at NCR’s annual meeting of stockholders in 2014 must follow the procedures found in SEC Rule 14a-8 and the Company’s Bylaws. To be eligible for possible inclusion in the Company’s 2014 proxy materials, all qualified proposals must be received by NCR’s Corporate Secretary no earlier than October 13, 2013, nor later than 5:00 p.m., Eastern Time, on November 12, 2013.

 Looking at, NCR has a classified board. Hopefully, that will be taken care of this year. Written consent can only be taken by a unanimous vote. Special meetings can only be called by shareholders holding not less than 50.1% of the voting power.  Supermajority vote requirement (66.67%) to approve mergers (default Maryland state statute). Supermajority vote requirement (80%) to amend certain charter and certain bylaw provisions.

NCR Corp.’s ISS Governance QuickScore as of Apr 1, 2013 is 7. The pillar scores are Audit: 10; Board: 5; Shareholder Rights: 9; Compensation: 3. 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 bsased on specific company disclosure. ISS, so far, has provided no detail on the relative distribution of the scores. Again, I see the board’s poor rating as further support for a proxy access proposal. Additionally, in 2012 more than 17% of shares were voted against two directors.

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