NCR Corporation (NCR): Proxy Score 50

NCRNCR Corporation (NCR), which provides solutions and services that enable businesses to connect, interact, and transact with their customers worldwide, is one of the stocks in my portfolio. Their annual meeting is coming up on 4/22/2015. had the vote of one fund when I checked and voted on 4/14/2015.  I voted with management 50% of the time and assigned NCR Corporation a proxy score of 50.

View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the NCR Corporation 2015 proxy in order to enhance corporate governance and long-term value.

NCR Corporation ISS Rating  

From Yahoo! Finance: NCR Corporation’s ISS Governance QuickScore as of Apr 1, 2015 is 6. The pillar scores are Audit: 10; Board: 2; Shareholder Rights: 7; Compensation: 5. 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… audit and shareholder rights.

NCR Corporation Compensation

NCR Corporation Summary Compensation Table (p. 48) shows the highest paid named executive officer (NEO) was CEO and President William R. Nuti, at  about $9.3M in 2014.  I’m using Yahoo! Finance to determine market cap ($4.9B) and Wikipedia’s rule of thumb regarding classification.

NCR Corporation 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 NCR Corporation’s pay is around that number. NCR Corporation shares underperformed in comparison to the NASDAQ over the most recent one, two, five, and ten year periods. Therefore, it is hard to give the CEO credit for below average performance.


The GMIAnalyst report I reviewed gave NCR Corporation an overall grade of ‘C.’ According to the report:

  •  The company pays long-term incentives to executives without requiring the company to perform above the median of its peer group, which is the case for 82.6% of companies in the Russell 3000 index. Incentive plans that pay for mediocre performance undermine the linkage between pay and performance. 
  • The CEO’s annual incentives did not rise or fall in line with annual financial performance, reflecting a potential misalignment in the short-term incentive design.
  • The CEO’s total summary pay for the last reported period was more than three times the median pay for the company’s other named executive officers. Such disparity in pay raises concerns regarding the company’s succession planning process and the distribution of responsibilities among the executive management team.
  • A decline has occurred in the CEO’s equity holdings in the company over last year. Diminished executive exposure to company stock may work to reduce the alignment between the CEO’s interests and those of shareholders.

With average relative pay, poor performance and the above issues, I voted against the pay package.

NCR Corporation Board of Directors and Board Proposals

Generally, when I vote against the pay package I also vote against the compensation committee, since they recommended the pay package to the full board. Therefore, of those running for office (NCR maintains a classified board) I voted against Gary J. Daichendt, Robert P. DeRodes, and Richard T. (“Mick”) McGuire III.

I voted in favor of amending the bonus plan, for tax purposes. I also voted in favor of declassifying the board. Florida SBA proposed this in 2013 and it got 80% of the vote. I voted against giving NCR my carte blanche proxy for “other business,” since I don’t know what might come up.

NCR Corporation Accounting

I voted to ratify NCR’s auditor, PriceWaterhouseCoopers, since far less than 25 percent of total audit fees paid are attributable to non-audit work.

Shareholder Proposals at NCR Corporation

With regard to shareholder proposals, there weren’t any.

CorpGov Recommendations for NCR Corporation – Votes Against Board Position in Bold

1.1Elect Director William R. NutiForWithhold
1.2Elect Director Gary J. DaichendtWithholdWithhold
1.3Elect Director Robert P. DeRodesWithholdWithhold
1.4Elect Director Richard T. ‘Mick’ McGuire, IIIWithholdWithhold
2Ratify PricewaterhouseCoopers LLP as AuditorsForFor
3Advisory Vote to Ratify Named Executive Officers’ CompensationAgainstAgainst
4Amend Executive Incentive Bonus PlanForFor
5Eliminate Supermajority Vote RequirementForFor
6Declassify the Board of DirectorsForFor
7Other BusinessAgainstAgainst

SharkRepellentGovernance Issues at NCR Corporation

Looking at for provisions unfriendly to shareowners:

  • Classified board with staggered terms. (Hopefully, that will be taken care of this year.)
  • Special meetings can only be called by shareholders holding not less than 50.1% of the voting power.
  • Various supermajority requirements are maintained, some of which might be taken care of this year.

Mark your Calendar to Submit Future Proposals at NCR Corporation

Stockholders interested in presenting a proposal for consideration at NCR’s annual meeting of stockholders in 2016 must follow the procedures found in SEC Rule 14a-8 and the Company’s Bylaws. To be eligible for possible inclusion in the Company’s 2016 proxy materials, all qualified proposals must be received by NCR’s Corporate Secretary no earlier than October 14, 2015, nor later than 5:00 p.m. Eastern Time November 13, 2015.


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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