Microsoft Corporation $MSFT is one of the stocks in my portfolio. Their annual meeting is coming up on 11/19/2013. ProxyDemocracy.org had collected the votes of four funds when I checked (there have been more since). I voted with management 75% 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.
MSFT’s Summary Compensation Table shows B. Kevin Turner, Chief Operating Officer, was the highest paid named executive officer (NEO) at about $10.4M in 2013. I’m using Yahoo! Finance to determine market cap ($297B) and Wikipedia’s rule of thumb regarding classification. MSFT is a mega-cap company. According to Equilar (page 6), the median CEO compensation at large-cap corporations was $9.7 million in 2012. I don’t have data for mega-caps.
The GMIAnalyst report I reviewed gave MSFT an A/B rating for pay but I’m not so sure. Domini and Trillium are both voting against the pay package. I’ve decided to vote against the pay package but not against the compensation committee, as I normally do when I think pay is excessive. I also voted against the bonus plan for having more than a 10% dilution possibility. I voted against Helmut Panke for serving on four boards and being over-boarded and for serving more than 10 years. I question how the board can be independent when more than half have served for more than 10 years. .
How I voted (CorpGov) below:
|1||Elect Director Steven A. Ballmer||For||For||For||For||For|
|2||Elect Director Dina Dublon||For||For||For||For||For|
|3||Elect Director William H. Gates||For||Against||For||Against||For|
|4||Elect Director Maria M. Klawe||For||For||For||For||For|
|5||Elect Director Stephen J. Luczo||For||Against||For||For||For|
|6||Elect Director David F. Marquardt||For||For||For||Against||For|
|7||Elect Director Charles H. Noski||For||For||For||For||For|
|8||Elect Director Helmut Panke||Against||For||For||For||For|
|9||Elect Director John W. Thompson||For||For||For||For||For|
|10||Amend Executive Incentive Bonus Plan||Against||Against||For||Against||Against|
|11||Advisory Vote to Ratify Named Executive Officers’ Compensation||Against||Against||For||For||Against|
Shareholders who, in accordance with SEC Rule 14a-8, wish to present proposals for inclusion in the proxy materials to be distributed in connection with next year’s annual meeting must submit their proposals so they are received by the Corporate Secretary of Microsoft at the address provided below no later than the close of business (5:30 p.m. Pacific Time) on June 9, 2014. As the rules of the SEC make clear, simply submitting a proposal does not guarantee that it will be included.
Looking at SharkRepellent.net, I see unanimous written consent (default Washington state statute) is required for shareowner action. I wonder if the law has opt out provisions. Special meetings can only be called by shareholders holding not less than 25% of the voting power. I’d like to see that lowered to 15%.
From Yahoo! Finance, Microsoft Corporation’s ISS Governance QuickScore as of Oct 1, 2013 is 2. The pillar scores are Audit: 1; Board: 7; Shareholder Rights: 5; Compensation: 2. 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.