$DELL is one of the stocks in my portfolio. Their annual meeting is coming up on 10/17/2013. ProxyDemocracy.org had collected the votes of three funds when I checked and voted on 10/9/2013. I voted with management 71% of the time. View Proxy Statement. I took a little less time in analyzing the proxy since the company is being sold to Michael Dell and the investment firm Silver Lake Partners for $24.9 billion and the votes will likely have little real impact, other than voicing opinions.
On the basis of public statements made by Icahn and SEC filings, it appears he no longer will attempt to nominate directors at the meeting and it is likely to be uneventful. Nonetheless, I have a proposal on the proxy and you never know what might happen.
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.
Dell’s pay was over that medium and I am generally voting against such pay packages in order to discourage continuous ratcheting up unless there are unusual circumstances. That sense was reinforced by an observation by GMIRatings that “CEO remuneration practices at Dell do not appear to be well aligned with sustainable shareholder interests.” For these reasons, I voted against the pay plan and against all members of the compensation committee, since they recommended the plan to the full board. Compensation committee members included:
- Shantanu Narayen, Chair
- Gerals J. Kleisterlee
I am also concerned that GMI assigned a “D” rating to the Dell board. Additionally, I support CII’s policy:
Companies should establish and publish guidelines specifying on how many other boards their directors may serve. Absent unusual, specified circumstances, directors with full-time jobs should not serve on more than two other boards. Currently serving CEOs should not serve as a director of more than one other company, and then only if the CEO’s own company is in the top half of its peer group. No other director should serve on more than five for-profit company boards.
That would provide another reason for voting against Narayen, since he is a CEO and sits on three boards. Dell Inc.’s ISS Governance QuickScore as of Oct 1, 2013 is 5. The pillar scores are Audit: 1; Board: 7; Shareholder Rights: 2; Compensation: 8. 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 disclosures.
Of course, I voted in favor of my own proposal to provide shareowners the right to act by written consent, which is plainly good governance.
How I voted (CorpGov) below:
| # | PROPOSAL TEXT | CorpGov | DOMINI | CALVERT | CBIS |
|---|---|---|---|---|---|
| 1.1 | Elect Director Donald J. Carty | For | For | Against | For |
| 1.2 | Elect Director Janet F. Clark | For | For | For | For |
| 1.3 | Elect Director Laura Conigliaro | For | For | For | For |
| 1.4 | Elect Director Michael S. Dell | For | Against | For | For |
| 1.5 | Elect Director Kenneth M. Duberstein | For | For | For | For |
| 1.6 | Elect Director Gerard J. Kleisterlee | Against | For | For | For |
| 1.7 | Elect Director Klaus S. Luft | For | For | For | For |
| 1.8 | Elect Director Alex J. Mandl | For | For | For | For |
| 1.9 | Elect Director Shantanu Narayen | Against | Against | For | For |
| 1.10 | Elect Director H. Ross Perot, Jr. | For | For | For | For |
| 2 | Ratify Auditors | For | For | For | Against |
| 3 | Advisory Vote to Ratify NEO Pay Plan | Against | Against | For | For |
| 4 | Provide Right to Act by Written Consent | Against | For | For | For |
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