iRobot Corporation ($IRBT) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/22/2013. ProxyDemocracy.org had collected the votes of no funds when I checked on 5/13/2013. I’ll check back and may post again on IRBT before the voting deadline. I voted with management 40% 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.
IRBT’s Summary Compensation Table (Page 27. Would it kill them to include a hyperlinked index?) shows Colin M. Angle, CEO and Board Chairman, was the highest paid named executive officer (NEO) at about $3.3M in 2012. I’m using Yahoo! Finance to determine market cap ($914M) and Wikipedia’s rule of thumb regarding classification. IRBT is a small-cap company. According to the United States Proxy Exchange (USPX) guidelines (pages 9 & 10), using data from Equilar, the median CEO compensation at small-cap corporations was $2.2 million in 2010.
Of course, I also voted for my own proposal to provide proxy access. The proposal presents two optional routes for shareowners seeking to place director nominees on IRBT’s proxy:
Corporate elections are just beginning a transition from contests among oligarchies to something more akin to democracy. The idea of multi-party elections may seem novel or foreign to the corporate governance industrial complex that has grown accustom to contests in which one side or the other is awarded with a victory, not much different than the spoils of war. We believe such multi-party monitoring will lead to less focus plundering by those in control and more on growing the business through sustainable long-term methods.
Looking at SharkRepellent.net, their mean bullet proof rating of IRBT is practically off the chart. The FactSet TrueCourse Bullet Proof Rating is a weighted average index comprised of significant components that impact takeover defenses. The rating scale is from 0 to 10 with a 10 representing the most formidable defenses. The rating system is a relative measurement and is not intended to measure the probability of a successful defense. Statistics are based upon the number of eligible and active companies in the SharkRepellent.net database.
|Mean Bullet Proof Ratings|
Similarly, ISS also rates IRBT as offering virtually no rights to shareowners. iRobot Corporation’s ISS Governance QuickScore as of May 1, 2013 is 5. The pillar scores are Audit: 1; Board: 1; Shareholder Rights: 10; Compensation: 2. 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.
could be required to verify the share ownership of possibly numerous individuals each year… We do not think that such investigations constitute the best use of the Company’s resources. Allowing stockholders who exhibit such an immaterial investment in the Company to make nominations using the Company’s proxy materials could lead to the election of “special interest directors” who may be inclined to represent the interests of the stockholders who have nominated them rather than the overall interests of all stockholders.
|1.1||Elect Director George C. McNamee||Against|
|1.2||Elect Director Paul Sagan||For|
|3||Advisory Vote to Ratify Named Executive Officers’ Compensation||Against|
Pursuant to Rule 14a-8 promulgated under the Exchange Act, in order to be included in the Proxy Statement and form of proxy relating to our 2014 Annual Meeting, we must receive any proposals of stockholders intended to be presented at the meeting no later than December 12, 2013. In addition, any proposals must comply with the other requirements of Rule 14a-8.