Steris Corp. (STE) is one of the stocks in my portfolio. Their annual meeting is coming up on 7/25/2013. ProxyDemocracy.org had collected the votes of one fund when I checked on 7/15/2013. 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. The rationale for peer group benchmarking is a mythological market for CEOs.
STE’s Summary Compensation Table shows Walter M Rosebrough, Jr., CEO was the highest paid named executive officer (NEO) at about $2.9M in 2012. I’m using Yahoo! Finance to determine market cap ($2.6B) and Wikipedia’s rule of thumb regarding classification. STE 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.
STE’s pay is below median, especially when we factor inflation. I voted right down the line with management and with CalSTRS.
How I voted (CorpGov) below:
| # | PROPOSAL TEXT | CorpGov | CALSTRS |
|---|---|---|---|
| 1.1 | Elect Director Richard C. Breeden | For | For |
| 1.2 | Elect Director Cynthia L. Feldmann | For | For |
| 1.3 | Elect Director Jacqueline B. Kosecoff | For | For |
| 1.4 | Elect Director David B. Lewis | For | For |
| 1.5 | Elect Director Kevin M. McMullen | For | For |
| 1.6 | Elect Director Walter M Rosebrough, Jr. | For | For |
| 1.7 | Elect Director Mohsen M. Sohi | For | For |
| 1.8 | Elect Director John P. Wareham | For | For |
| 1.9 | Elect Director Loyal W. Wilson | For | For |
| 1.10 | Elect Director Michael B. Wood | For | For |
| 2 | Advisory Vote to Ratify Named Executive Officers’ Compensation | For | For |
| 3 | Ratify Auditors | For | For |
The deadline for shareholders to submit proposals to be considered for inclusion in the proxy statement for the 2014 Annual Meeting of Shareholders is expected to be February 4, 2014. However, if the date of the 2014 Annual Meeting is changed by more than 30 calendar days from the date on which this year’s meeting is held, a proposal must be received by the Company a reasonable time before the proxy solicitation in connection with the meeting is made.
Looking at SharkRepellent.net, STE has a plurality vote standard to elect directors with resignation policy. Frankly, I’m not sure what that means… maybe they adopted a “plurality plus” standard, which requires directors to submit their resignation if they get more withholds than positive votes? I see written consent requires a 100% vote, special meetings can only be called by 50% or more of the vote, and it takes 75% of voting power to amend certain charter and bylaw provisions.
Steris Corp.’s ISS Governance QuickScore as of July 1, 2013 is 3. The pillar scores are Audit: 1; Board: 2; Shareholder Rights: 5; Compensation: 4. Each of the pillar scores for Audit, Board, Shareholder Rights and Compensation, are based on specific company disclosures. The lower the score, the lower the risk.
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