NCR Corporation (NCR): How I Voted – Proxy Score 40

NCRThe NCR Corporations $NCR, is one of the stocks in my portfolio. Their annual meeting is coming up on 4/23/2014. had collected the votes of two funds when I checked and voted on 4/18/2014.  I voted with management 40% of the time. View Proxy Statement. Why no index with no links? That seems so basic. Perhaps NCR doesn’t want to make reading the proxy easy?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 CEOsNCR’s Summary Compensation Table (page 39) shows CEO/Chair William R. Nuti, was the highest paid named executive officer (NEO) at about $11M in 2013. I’m using Yahoo! Finance to determine market cap ($5.7B) and Wikipedia’s rule of thumb regarding classification. NCR 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 NCR is well over median. In such cases it is my general policy to vote against the pay plan, as well as the Compensation Committee. In this case none of the Committee members are up for reelection, so I voted against the board members who are.


The GMIAnalyst report I reviewed gave NCR an overall grade of C for several reasons including overboard directors, severance vesting and expense recognition.  I’m rushed, so didn’t have time to examine these and other issues. Of course, I voted in favor of the board’s resolution to declassify the board. It wasn’t proposed because of any great insight from directors but because Harvard’s Shareholder Rights Project submitted a proposal to declassify the board last year on behalf of Florida SBA. It won with 80% of the vote. 

How I voted (CorpGov) below and in bold where against the Board’s recommendations:

1.1Elect Director Richard L. ClemmerWithholdWithholdWithhold
1.2Elect Director Kurt P. KuehnWithholdWithholdWithhold
2Ratify AuditorsForForAgainst
3Ratify NEO CompensationAgainstForFor
4Declassify the Board of DirectorsForForFor

Mark your calendar:

Stockholders interested in presenting a proposal for consideration at NCR’s annual meeting of stockholders in 2015 must follow the procedures found in SEC Rule 14a-8 and the Company’s Bylaws. To be eligible for possible inclusion in the Company’s 2015 proxy materials, all qualified proposals must be received by NCR’s Corporate Secretary no earlier than October 11, 2014, nor later than November 10, 2014..

  Looking at, here’s some of the issues I see:

  • Classified board with staggered terms.
  • Directors may only be removed for cause and only by the vote of 80% of the shares entitled to vote.
  • Special meetings can only be called by shareholders holding not less than 50.1% of the voting power.
  • Supermajority vote requirement (80%) to amend certain charter and certain bylaw provisions.
  • Unanimous written consent.

From Yahoo! Finance, NCR Corp.’s ISS Governance QuickScore as of Apr 1, 2014 is 5. The pillar scores are Audit: 5; Board: 3; Shareholder Rights: 7; Compensation: 4. 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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