Bristol-Myers Squibb (BMY): How I Voted – Proxy Score 43

BMYBristol-Myers Squibb $BMY is one of the stocks in my portfolio. Their annual meeting is coming up on 5/6/2014. ProxyDemocracy.org had collected the votes of two funds when I checked and voted on 4/28/2014.  I voted with management 43% of the time.  View BMY’s Proxy Statement, which at least has a linked Table of Contents. 

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 CrimeI 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

BMY’s Summary Compensation Table shows CEO Lamberto Andreotti was the highest paid named executive officer (NEO) at about $20.8M in 2013. I’m using Yahoo! Finance to determine market cap ($81.8B) and Wikipedia’s rule of thumb regarding classification. BMY is a large-cap company. According to Equilar (page 6), the median CEO compensation at large-cap corporations was $9.7 million in 2012, so BMY is over median. Additionally, according to GMI:

The company has not disclosed specific, quantifiable performance target objectives for the CEO, in contrast to 73.9% of companies in its home market that have provided such metrics. Disclosure of performance metrics is essential for investors to assess the rigor of incentive programs.

Therefore, I voted against the pay plan and members of the Compensation Committee:

  • Togo D. West, Jr., Chair
  • Lewis B. Campbell
  • Michael Grobstein
  • Vicki L. Sato, Ph.D.
  • Gerald L. Storch

GMIAnalyst

The GMIAnalyst report I reviewed gave BMY an overall grade of ‘C.’ I’m not sure why CBIS and Trillium are voting not to ratify the auditor, Deloitte & Touche LLP. I did see that according to GMIAnalyst, 

Bristol-Myers Squibb Co is currently rated as having Very Aggressive Accounting & Governance Risk (AGR). This places them in the 7th percentile among all companies in North America, indicating higher accounting and governance risk than 93% of companies.

Therefore, I went ahead and voted with the mutual funds against ratifying BMY’s auditor. With regard to shareowner proposals, of course I voted in favor Kenneth Steiner’s proposal to move to simple majority voting requirements for certificate of incorporation changes. According to BMY, the proposal to remove the 75% supermajority voting provision applicable to common stockholders was made. “However, the proposal to remove the supermajority voting provisions applicable to preferred stockholders was not approved because less than two-thirds of the outstanding preferred shares voted in favor of the proposal as required by our Amended and Restated Certificate of Incorporation.” I think we need to keep trying until we get there.

How I voted (CorpGov) below using bold where my vote opposes the board’s recommendation:

# PROPOSAL CorpGov CBIS TRILLIUM
1A Elect Director Lamberto Andreotti For For For
1B Elect Director Lewis B. Campbell Against For For
1C Elect Director James M. Cornelius For For For
1D Elect Director Laurie H. Glimcher For For For
1E Elect Director Michael Grobstein Against For For
1F Elect Director Alan J. Lacy For For For
1G Elect Director Thomas J. Lynch, Jr. For For For
1H Elect Director Dinesh C. Paliwal For For For
1I Elect Director Vicki L. Sato Against For For
1J Elect Director Gerald L. Storch Against For For
1K Elect Director Togo D. West, Jr. Against For For
2 Ratify Auditors Against Against Against
3 Ratify NEO Compensation Against For Against
4 Adopt Simple Majority Vote For For For

Mark your calendar:

Stockholder proposals relating to our 2015 Annual Meeting of Stockholders must be received by us at our principal executive offices, Bristol-Myers Squibb Company, 345 Park Avenue, New York, New York 10154, attention: Corporate Secretary, no later than November 19, 2014. Such proposals must comply with SEC regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in company sponsored proxy materials. Stockholders are encouraged to contact the Office of the Corporate Secretary prior to submitting a stockholder proposal or any time they have a concern. At the direction of the Board of Directors, the Office of the Corporate Secretary acts as corporate governance liaison to stockholders.

  Looking at SharkRepellent.net, no action can be taken without a meeting by written consent and Special meetings can only be called by shareholders holding not less than 25% of the voting power.

From Yahoo! Finance, Bristol-Myers Squibb Company’s ISS Governance QuickScore as of Apr 1, 2014 is 6. The pillar scores are Audit: 1; Board: 9; Shareholder Rights: 4; Compensation: 6. 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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