Stratasys Ltd, SSYS – Proxy Vote Score 30%

SSYSStratasys $SSYS, which provides additive manufacturing (AM) solutions (3D printers) for the creation of parts used in the processes of designing and manufacturing products and for the direct manufacture of end partsis one of the stocks in my portfolio. The next annual meeting for Stratasys is July 10, 2014. had collected the votes of two funds on Stratasys when I checked and voted on 7/6/2014. I voted with the Board’s recommendations 30% of the time. View Stratasys Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Stratasys proxy in order to enhance corporate governance and long-term value.  

ISS Rating

From Yahoo! Finance: There was no ISS rating available on Yahoo! Finance.

Stratasys Compensation

Stratasys’ Summary Compensation Table? I couldn’t find one. I’m on vacation, and although Statasys seems deserving of considerable analysis, I didn’t have time to do so and voted with Florida SBA. I will note that Stratasys shares outperformed the NASDAQ over the most recent two and five year periods and about matched during the most recent one year period. GMIAnalyst

The GMIAnalyst report I reviewed gave Stratasys an overall grade of ‘B.’ However, according to the report:

  •  The board has not established a formal clawback policy regarding its executive incentive pay.
  • The company’s failure to establish and disclose specific standards regarding minimum equity retention standards for its directors may weaken the ability of equity awards to align executives’ interests with long-term value creation.

Stratasys Board

  • GMI has flagged the board as potentially entrenched due to a high number of long-serving directors. Only 21.9% of firms tracked by GMIAnalyst in United States have been flagged for having an entrenched board.
  • 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 57.8% of companies in the Russell 3000.
  • The company has not adopted a full majority director election standard, greatly limiting the ability of company shareholders to hold members of the board accountable in uncontested elections. Majority voting has been widely adopted in the United States, especially among larger-cap companies, but more than 61.9% of the Russell 3000 remains under a plurality or plurality plus voting standard.

Stratasys Accounting

I voted to ratify the the Stratasys auditor.

Stratasys Shareholder Proposals

None this year.

CorpGov Recommendations on the Statasys Proxy Below: Votes Against Board Position in Bold

1Elect Ziva Patir as Independent Director, to Serve as an Unclassified Director, Until the End of the Next Annual General MeetingForAgainstFor
2Approve Discretionary Cash Bonus to David Reis, CEO and Director, for 2013AgainstAgainstAgainst
3Approve Cash Bonus to S. Scott Trump, Chairman and Chief Innovation Officer, for 2013AgainstAgainstAgainst
4Approve Cash Bonus to Ilan Levin, Director and Chairman of Makerbot, Subsidiary, for 2013AgainstAgainstAgainst
5.1Grant Edward J. Fierko, Director, Options to Purchase 20,000 SharesAgainstAgainstAgainst
5.2Grant John J. McEleney, Director, Options to Purchase 20,000 SharesAgainstAgainstAgainst
5.3Grant Clifford H. Schwieter, Director, Options to Purchase 20,000 SharesAgainstAgainstAgainst
6Increase Liability Coverage of D&O PolicyForForFor
7Reappoint Kesselman & Kesselman as Auditors and Authorize Board to Fix Their RemunerationForAgainstFor
8Discuss Financial Statements and the Report of the Board for 2013N/AN/AN/A
9Other Business (Voting if Applicable)AgainstAgainstAgainst


Issues for Future Proposals at Stratasys

 Looking at for Stratasys provisions unfriendly to shareowners I don’t see the usual report. Glancing at the proxy, however, I see that changes to bylaws requires a supermajority vote of 75% of the total voting power of the company.

  • Plurality vote standard to elect directors with resignation policy.
  • Directors may be removed with or without cause but only by the vote of 75% of the shares entitled to vote.
  • Unanimous written consent.
  • Special meetings can only be called by shareholders holding not less than 50% of the voting power.
  •  Supermajority vote requirement (75%) to amend certain charter and bylaw provisions unless approved by 66.67% of the board.

Mark your Calendar

Unfortunately, I don’t see in the current proxy any deadline for shareholders to submit proposals to be considered for inclusion in the next proxy statement.



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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