How I Voted: Marriott International Inc (MAR) – Proxy Score 93%

Marriott International Inc ($MAR) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/10/2013. had collected the votes of two funds when I checked on 5/3/2013.  I voted with management 93% 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.

Marriott’s Summary Compensation Table shows Ame M. Sorenson, CEO was the highest paid named executive officer (NEO) at about $8.6M in 2012. I’m using Yahoo! Finance to determine market cap ($13.4B) and Wikipedia’s rule of thumb regarding classification. Marriott is a large-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 $10.8 million in 2010.

Marriott’s pay is below median. Therefore, I voted for the pay package. There are now six board members who have served for at least a decade and two directors who are at least 70 years old, signaling possible succession planning concerns. I joined with CalSTRS and the other funds in voting against Henderson.

How I voted (my vote in parentheses) below:

1.1Elect Director J.W. Marriott, Jr.ForForAgainstForAgainst
1.2Elect Director John W. Marriott, IIIForN/AForForAgainst
1.3Elect Director Mary K. BushForForForForFor
1.4Elect Director Frederick A. HendersonAgainstAgainstAgainstAgainstAgainst
1.5Elect Director Lawrence W. KellnerForForForForAgainst
1.6Elect Director Debra L. LeeForForForForFor
1.7Elect Director George MunozForN/AForForAgainst
1.8Elect Director Harry J. PearceForForForForAgainst
1.9Elect Director Steven S ReinemundForForForForFor
1.10Elect Director W. Mitt RomneyForForForForFor
1.11Elect Director Lawrence M. SmallForForForForAgainst
1.12Elect Director Arne M. SorensonForForForForAgainst
2Ratify AuditorsForForForAgainstAgainst
3Ratify Named Executive Officers’ CompensationForForAgainstForFor

To be considered for inclusion in our proxy statement for the 2014 annual meeting of shareholders, shareholder proposals must be received at our offices no later than the close of business December 6, 2013. Proposals must comply with Rule 14a-8 under the Securities Exchange Act of 1934, and must be submitted in writing to the Corporate Secretary, Marriott International, Inc., Department 52/862, 10400 Fernwood Road, Bethesda, Maryland 20817.

 Looking at, I see no action can be taken without a meeting by written consent. Shareholders cannot call special meetings. Supermajority vote requirement (66.67%) to approve mergers. Supermajority vote requirement (66.67%) to amend certain charter and certain bylaw provisions.

Marriott International, Inc.’s ISS Governance QuickScore as of Apr 1, 2013 is 10. The pillar scores are Audit: 1; Board: 10 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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