ITC Holdings (ITC): How I Voted at Special Meeting – Proxy Score 80

ITC Holdings (ITC) is one of the stocks in my portfolio. Their annual meeting is coming up on 4/16/2013. had collected the votes of only one fund when I checked and voted on 4/9/2012.  I voted with management 80% 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 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 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 NEOs increased from 5 percent of earnings 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.

ITC’s SummaryCompensation Table shows that Joseph L. Welch, CEO and Board Chairman, was the highest paid named executive officer (NEO) at about $8.8M in 2012, after getting $10.8M in 2011. I’m using Yahoo! Finance to determine market cap and Wikipedia’s rule of thumb regarding classification. ITC 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.

Even factoring inflation, ITC’s pay is substantially above median. It also pays its CEO substantially more than larger cap peers at The AES Corporation, NRG Energy Inc, Pinnacle West Capital Corporation, Alliant Energy Corporation, Alliant Energy Corporation, and NV Energy, Inc.. I voted against the compensation plan and all members of the compensation committee Kevin R. Johnson (Chair), Olden Lee, James G. Shennan, Jr., Javier G. Teruel, and Myron E. Ullman, III. I also joined with others in opposing the stock plan but voted to ratify the auditor.

Based on the above, how Calvert voted, and my general animosity to golden parachutes, I voted against the golden parachutes but in favor of the other items.

ITC’s annual meeting is coming up on May 15.  The proxy is available but no votes by shareowners are yet available on, so I’ll wait until analyzing how I’m voting.

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