Broadridge

Broadridge Financial Solutions, Inc. (BR): Proxy Score 80

BroadridgeBroadridge Financial Solutions, Inc. (BR), which provides investor communications and technology-driven solutions for the financial services industry, is one of the stocks in my portfolio. Their annual meeting is coming up on 11/13/2014. ProxyDemocracy.org had collected the votes of two funds when I checked on 11/3/2014.  I voted with management 80% of the time and assigned them a proxy score of 80.  View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Broadridge 2014 proxy in order to enhance corporate governance and long-term value.

Broadridge ISS Rating

From Yahoo! Finance: Broadridge Financial Solutions, Inc.’s ISS Governance QuickScore as of Oct 1, 2014 is 1. The pillar scores are Audit: 1; Board: 1; Shareholder Rights: 2; Compensation: 2. 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. That gives us a quick idea of where to focus.

Broadridge Compensation

Broadridge Summary Compensation Table shows the highest paid named executive officer (NEO) was CEO Richard J. Daly, at about $6.25M.  I’m using Yahoo! Finance to determine market cap ($5.25B) and Wikipedia’s rule of thumb regarding classification. Broadridge is a mid-cap company.  According to Equilar (page 6), the median CEO compensation at mid-cap corporations was $4.9 million in 2013, so Broadridge’s pay is well above that. However, Broadridge’s shares have outperformed. GMIAnalyst

The GMIAnalyst report I reviewed gave Broadridge  an overall grade of ‘B.’

Given the high pay but good performance, I voted against the pay package and the head of the compensation committee: Alan J. Weber.

Broadridge Board of Directors

When I vote against the pay package, I generally vote against all  members of the compensation committee. In this case I only voted against the chair.

Broadridge Accounting

I voted to ratify Broadridge’s auditor, Deloitte & Touche LLP, since less than 25 percent of total audit fees paid are attributable to non-audit or related work.

Shareholder Proposals at Broadridge

There were none.

CorpGov Recommendations for Broadridge Below – Votes Against Board Position in Bold

# PROPOSAL TEXT CorpGov CALVERT  CBIS
1a Elect Director Leslie A. Brun For For For
1b Elect Director Richard J. Daly For For For
1c Elect Director Robert N. Duelks For For For
1d Elect Director Richard J. Haviland For For For
1e Elect Director Stuart R. Levine For For For
1f Elect Director Maura A. Markus For For For
1g Elect Director Thomas J. Perna For For For
1h Elect Director Alan J. Weber Withhold For For
2 Ratify NEO Compensation Against For For
3 Ratify Auditors For For Against

SharkRepellentLooking at SharkRepellent.net for provisions unfriendly to shareowners, I found the following standouts:

  • No action can be taken without a meeting by written consent.
  • Shareholders cannot call special meetings.
  • Supermajority vote requirement (80%) to amend certain charter provisions.

Mark your Calendar to Submit Future Proposals at Symantec

Under SEC rules, if a stockholder wants to include a proposal in our proxy statement and form of proxy for the Company’s 2015 annual meeting of stockholders, our Secretary must receive the proposal at our principal executive offices located at 1981 Marcus Avenue, Lake Success, New York 11042 no later than June 5, 2015. Any such proposal should comply with the requirements of Rule 14a-8 under the Exchange Act.

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 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 % 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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