Proto Labs Inc (NYSE:PRLB), is one of the stocks in my portfolio. Their annual meeting is coming up on 5/16/2014. ProxyDemocracy.org had collected the votes of one fund when I checked and voted on 5/13/2014. I voted with management 100% of the time. View Proxy Statement, which was not user friendly, since the Table of Contents contained no links. Read Warnings below.
Compensation
PLRB’s Summary Compensation Table (page 30) shows COO Donald G. Krantz was the highest paid named executive officer (NEO) at about $913,000 in 2013. I’m using Yahoo! Finance to determine market cap ($1.6B) and Wikipedia’s rule of thumb regarding classification. PLRB is a amall-cap company. According to Equilar (page 6), the median CEO compensation at small-cap corporations was $2.5 million in 2012, so PLRB is well within median. PLRB shares have performed better than the NASDQ two and five year periods but not over the past year.
I’m concerned that PRLB has not disclosed specific, quantifiable performance target objectives for the CEO, in contrast to 74% of companies that have. Despite this and other concerns, I voted in favor of the pay package.
GMIAnalyst
The GMIAnalyst report I reviewed gave WCN an overall grade of ‘A.’ I’m a little skeptical, since there doesn’t seem to be a lot of data supporting the rating.
Board of Directors
I feel a bit like flying in the dark without instruments. I gave the board the benefit of the doubt and voted for all.
Other Proxy Issues
I voted in favor of the auditor and the one year say on pay frequency. I hope to have more information if I continue to hold PRLB next year. I would especially welcome reader comments on this one.
| # | PROPOSAL TEXT | CorpGov | CBIS |
|---|---|---|---|
| 1.1 | Elect Director Lawrence J. Lukis | For | Withhold |
| 1.2 | Elect Director Victoria M. Holt | For | Withhold |
| 1.3 | Elect Director Bradley A. Cleveland | For | Withhold |
| 1.4 | Elect Director Rainer Gawlick | For | Withhold |
| 1.5 | Elect Director John B. Goodman | For | Withhold |
| 1.6 | Elect Director Douglas W. Kohrs | For | Withhold |
| 1.7 | Elect Director Brian K. Smith | For | Withhold |
| 1.8 | Elect Director Sven A. Wehrwein | For | Withhold |
| 2 | Ratify Auditors | For | Against |
| 3 | Ratify NEO Compensation | For | For |
| 4 | Say on Pay Frequency | One Year | One Year |
Mark your Calendar
Proposals of our shareholders that are intended to be presented by such shareholders at our fiscal 2014 Annual Meeting of Shareholders to be held in calendar 2015 and that shareholders desire to have included in our proxy materials related to such Annual Meeting must be received by us at our principal executive offices no later than 5:00 p.m. Central Time, December 7, 2014, which is 120 calendar days prior to the anniversary of this year’s mailing date. Upon timely receipt of any such proposal we will determine whether or not to include such proposal in the proxy statement and proxy in accordance with applicable regulations governing the solicitation of proxies.
Issues for Future Proposals
Looking at SharkRepellent.net: - Plurality vote standard to elect directors with no resignation policy
- No action can be taken without a meeting by written consent unless unanimous
- Minnesota law provides that a special meeting to facilitate a business combination, including any action that changes the composition of the board, must be called by 25% or more of the voting power.
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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