FactSet Research Systems Inc. $FDS is one of the stocks in my portfolio. Their annual meeting is coming up on 12/17/2013. ProxyDemocracy.org had collected the votes of two funds when I checked and voted on 12/10/2013. I voted with management 80% 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.
FDS’ Summary Compensation Table shows combined CEO/Chair Philip A. Hadley, was the highest paid named executive officer (NEO) at about $1.7M in 2013 (page 25). I’m using Yahoo! Finance to determine market cap ($4.9B) and Wikipedia’s rule of thumb regarding classification. EDS is a mid-cap company. According to Equilar (page 6), the median CEO compensation at mid-cap corporations was $4.7 million in 2012, so they are just under median after factoring inflation.
The GMIAnalyst report I reviewed gave FDS an C rating for pay, they are about at median for size, Calvert and Trillium are both voting in favor of the pay package and I did as well. I voted against Joseph Laird Jr. because he doesn’t own any stock in our company and has served for 15 years. 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 11 years. In fact, seven out of nine director have served more than 11 years (independence concern), four of them don’t own any shares, while a fifth owns only 50 shares. These aren’t positive signs.
What is a positive sign is management’s proposal to move to a majority voting standard in uncontested elections. Of course, I voted in favor of that measure.
How I voted (CorpGov) below:
| # | PROPOSAL TEXT | CorpGov | CALVERT | TRILLIUM |
|---|---|---|---|---|
| 1.1 | Elect Director Joseph E. Laird, Jr. | Withhold | Withhold | Withhold |
| 1.2 | Elect Director James J. McGonigle | For | Withhold | Withhold |
| 2 | Ratify Auditors | For | Against | Against |
| 3 | Advisory Vote to Ratify Named Executive Officers’ Compensation | For | For | For |
| 4 | Adopt Majority Voting for Uncontested Election of Directors | For | For | For |
Proposals of stockholders intended to be presented at the 2014 Annual Meeting of Stockholders must be received by FactSet, attention of Ms. Rachel R. Stern, the Company’s Secretary, at its principal executive offices, no later than August 1, 2014, or such other date as determined with reference to the Company’s By-laws, as amended, as applicable, to be included in the 2014 Proxy Statement.
Looking at SharkRepellent.net, FDS has a classified board with staggered terms. Action without a meeting by written consent is permitted only by shareholders holding 80% of the outstanding shares. Shareholders cannot call special meetings. FDS maintains a supermajority vote requirement (80%) to amend certain charter and certain bylaw provisions.
From Yahoo! Finance, FactSet Research Systems Inc.’s ISS Governance QuickScore as of Nov 1, 2013 is 7. The pillar scores are Audit: 1; Board: 6; Shareholder Rights: 9; Compensation: 7. 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.
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