American Tower Corp $AMT, is one of the stocks in my portfolio. Their annual meeting is coming up on 5/20/2014. ProxyDemocracy.org had collected the votes of two funds when I checked and voted on 5/13/2014. I voted with management 55% of the time. View Proxy Statement. Read Warnings below.
Compensation
AMT’s Summary Compensation Table shows CEO/Chair James D. Taiclet, Jr. was the highest paid named executive officer (NEO) at about $12.2M in 2013. I’m using Yahoo! Finance to determine market cap ($35B) and Wikipedia’s rule of thumb regarding classification. AMT 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 AMT is well over that. AMT pays a good dividend and shares have performed well in comparison with the S&P 500 over the last five years but not over the last one and two year periods.
Additionally, I’m concerned that unvested equity awards partially or fully accelerate upon the CEO’s termination, characteristic of 90.2% of companies in the home market. The company has not disclosed specific, quantifiable performance target objectives for the CEO, in contrast to 73.9% of companies in its home market. The CEO’s annual incentives did not rise or fall in line with annual financial performance. For all the above reasons, I voted against the pay package and members of the compensation committee:
- Samme L. Thompson, Chairperson
- Gustavo Lara Cantu
- Pamela D.A. Reeve
GMIAnalyst
The GMIAnalyst report I reviewed gave AMT an overall grade of ‘C.’ From their report a few highlights from the report stood out:
- The company has failed to split the roles of CEO and chairman, which may compromise even further the board’s independence from current management interests. Split CEO and chairman roles are characteristic of 46.1% of companies in the S&P 500.
American Tower Corporation does not regularly publish a formal sustainability report. It does not currently report on its sustainability policies and practices via the Global Reporting Initiative, a commonly used and highly effective standard for such reporting, nor has it become a voluntary signatory of the UN Global Compact, yet another commonly employed global standard for achieving and maintaining more effective sustainability practices.
Board of Directors
More than half the directors have served for 10 years or more.
Other Proxy Issues
According to GMI, AMT is currently rated as having Very Aggressive Accounting & Governance Risk (AGR). This places them in the 4th percentile among all companies in North America, indicating higher accounting and governance risk than 96% of companies. American Tower Corporation paid a total of $10,220,000 in audit and other related fees. This figure includes $5,382,000 in basic audit fees. I am assuming the remainder was for consulting fees that might influence the audit. Therefore, I voted against the auditor.
| # | PROPOSAL TEXT | CorpGov | CBIS | AFSCME |
|---|---|---|---|---|
| 1a | Elect Director Raymond P. Dolan | For | For | Against |
| 1b | Elect Director Ronald M. Dykes | For | For | For |
| 1c | Elect Director Carolyn F. Katz | For | For | For |
| 1d | Elect Director Gustavo Lara Cantu | Against | For | For |
| 1e | Elect Director JoAnn A. Reed | For | For | For |
| 1f | Elect Director Pamela D.A. Reeve | Against | For | Against |
| 1g | Elect Director David E. Sharbutt | For | For | For |
| 1h | Elect Director James D. Taiclet, Jr. | For | For | Against |
| 1i | Elect Director Samme L. Thompson | Against | For | For |
| 2 | Ratify Auditors | Against | Against | Against |
| 3 | Ratify NEO Compensation | Against | Against | Against |
Mark your Calendar
Pursuant to Rule 14a-8 promulgated under the Exchange Act, to be included in the Proxy Statement and form of proxy relating to our 2015 Annual Meeting, we must receive any proposals of stockholders intended to be presented at the meeting no later than December 5, 2014. In addition, any proposals must comply with the other requirements of Rule 14a-8.
Issues for Future Proposals
Looking at SharkRepellent.net: - Special meetings can only be called by shareholders holding not less than 25% of the voting power.
- The absence of confidential voting policies.
Warnings
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.
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