Marriott (MAR): How I Voted – Proxy Score 60

MarriottMarriott International $MAR, is one of the stocks in my portfolio. Their annual meeting is coming up on 5/9/2014. had collected the votes of one fund when I checked and voted on 5/5/2014.  I voted with management 60% 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.


MAR’s Summary Compensation Table shows CEO Arne M. Sorenson, was the highest paid named executive officer (NEO) at about $9.2M in 2013. I’m using Yahoo! Finance to determine market cap ($17.2B) and Wikipedia’s rule of thumb regarding classification. MAR is a mid-cap company.  According to Equilar (page 6), the median CEO compensation at large-cap corporations was $4.7 million in 2012, so MAR is well over median. Therefore, I voted against the pay package, against the stock plan and against the members of the compensation committee, which included Steven S Reinemund, Chair, Mary K. Bush, and Harry J. Pearce. Ms. Bush also serves on four boards, which I think is too many to do an adequate job. Lawrence M. Small was not renominated, having reached the age of 72.


The GMIAnalyst report I reviewed gave MAR an overall ‘D’ for several reasons, including concerns about possible Related Party Transactions, Board Integrity, Overboarded Directors, Severance Vesting, Asset-Liability Valuation, Carbon Emissions, Water Use, Other Social Impact Events

With regard to shareowner proposals, of course I voted in favor of Myra K. Young’s (my wife) proposal to change any charter and/or bylaws provisions that call for a greater than simple majority vote. Simple majority provisions are simply better governance. The Council of Institutional Investors, whose members have over $3T in assets invested agree and have the following policy

3.6   Voting Requirements:  A majority vote of common shares outstanding should be sufficient to amend company bylaws or take other action that requires or receives a shareowner vote. Supermajority votes should not be required.

What makes the situation even worse at MAR is that insiders control 23% of the vote. Therefore changes would require the vote of every outside shareowner. Don’t let the Board’s opposition statement fool you. Reforms were adopted because of proposals and votes by shareowners, including majority voting for directors, which passed with 95% of the shares voted in favor and declassifying the board, which passed with 55% of shares voted in favor.

How I voted (CorpGov) below, with votes against the Board’s position noted in bold:

1.1Elect Director J.W. Marriott, Jr.ForFor
1.2Elect Director John W. Marriott, IIIForFor
1.3Elect Director Mary K. BushAgainstFor
1.4Elect Director Frederick A. HendersonForFor
1.5Elect Director Lawrence W. KellnerForFor
1.6Elect Director Debra L. LeeForFor
1.7Elect Director George MunozForFor
1.8Elect Director Harry J. PearceAgainstFor
1.9Elect Director Steven S ReinemundAgainstFor
1.10Elect Director W. Mitt RomneyForFor
1.11Elect Director Arne M. SorensonForFor
2Ratify AuditorsForAgainst
3Ratify NEO’ CompensationAgainstFor
4Amend Omnibus Stock PlanAgainstAgainst
5Reduce Supermajority Vote RequirementForFor

Mark your calendar:

To be considered for inclusion in our proxy statement for the 2015 annual meeting of shareholders, shareholder proposals must be received at our offices no later than the close of business December 5, 2014. Proposals must comply with Rule 14a-8 under the Securities Exchange Act of 1934, and must be submitted in writing to the Corporate Secretary, Marriott International, Inc., Department 52/862, 10400 Fernwood Road, Bethesda, Maryland 20817.

  Looking at, no action can be taken without a meeting by written consent. Shareholders cannot call special meetings. Supermajority vote requirement (66.67%) to approve mergers. Supermajority vote requirement (66.67%) to amend certain charter and certain bylaw provisions.

From Yahoo! Finance, Marriott International, Inc.’s ISS Governance QuickScore as of May 1, 2014 is 5. The pillar scores are Audit: 1; Board: 6; 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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