Proto Labs Inc (PRLB): Proxy Score 100

Proto Labs Inc ($PRLB) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/23/2013. ProxyDemocracy.org had collected the votes of two funds when I checked on 5/15/2013.  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.

PRLB’s Summary Compensation Table shows John R. Judd, CFO was the highest paid named executive officer (NEO) at about $652,120 in 2012. I’m using Yahoo! Finance to determine market cap ($1.4B) and Wikipedia’s rule of thumb regarding classification. CMG is barely into the large-cap company category. According to the United States Proxy Exchange (USPX) guielines (pages 9 & 10), using data from Equilar, the median CEO compensation at small-cap corporations was $2.2 million in 2010.

PRLB’s pay is substantially below median, even if we factor inflation.  Therefore, I would have voted for the pay package if given an opportunity. PRLB’s capitalization is much higher than $75M, so I’m not sure why thy aren’t reporting. Maybe the vote is on a three year cycle?

How I voted (CorpGov) below:

Mark your calendar:

Proposals of our shareholders that are intended to be presented by such shareholders at our fiscal 2013 Annual Meeting of Shareholders to be held in calendar 2014 and that shareholders desire to have included in our proxy materials related to such Annual Meeting must be received by us at our principal executive offices no later than 5:00 p.m. Central Time, December 10, 2013, which is 120 calendar days prior to the anniversary of this year’s mailing date. Upon timely receipt of any such proposal we will determine whether or not to include such proposal in the proxy statement and proxy in accordance with applicable regulations governing the solicitation of proxies.

 Looking at SharkRepellent.net, I see PRLB has a plurality vote standard to elect directors with no resignation policy.  No action can be taken without unanimous written consent. PRLB maintains blank check preferred stock.

ISS doesn’t have a Governance QuickScore for PRLB, or at least not one that is reported on Yahoo! Finance.

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