Premiere Global Services

Premiere Global Services: Proxy Score 67

Premiere Global ServicesPremiere Global Services, Inc. (NYSE:PGI), one of the stocks in my portfolio, offers virtual meeting solutions. Its cloud-based solutions provides multi-point, real-time virtual collaboration using video, voice, mobile, web streaming and file sharing technologies. Their annual meeting is coming up on 6/17/2015. ProxyDemocracy.org had the vote of one fund when I checked and voted on 6/14/2015. I also located the vote of CalSTRS.  I voted with the board 67% of the time and assigned Premiere Global Services a proxy score of 67.

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

Premiere Global Services: ISS Rating

From Yahoo! Finance: Premiere Global Services, Inc.’s ISS Governance QuickScore as of Jun 1, 2015 is 2. The pillar scores are Audit: 1; Board: 5; Shareholder Rights: 5; Compensation: 1. 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… Shareholder Rights.

Premiere Global Services: Compensation

Premiere Global Services Summary Compensation Table (p. 47) shows the highest paid named executive officer (NEO) was CEO/Chair Boland T. Jones, at about $4.9M in 2014.  I’m using Yahoo! Finance to determine market cap ($481M) and Wikipedia’s rule of thumb regarding classification.

Premiere Global Services is a small-cap company.  According to Equilar (page 6), the median CEO compensation at small-cap corporations was $2.7 million in 2013, so Premiere Global Services’ pay is above that number. Premiere Global Services shares out-performed the S & P 500 over the most recent five year period but underperformed during the most recent one, two and ten year period.

The MSCI GMIAnalyst report I reviewed gave Premiere Global Services an overall grade of ‘D.’ According to the report:MSCI GMIAnalyst

  •  Unvested equity awards partially or fully accelerate upon the CEO’s termination. Accelerated equity vesting allows executives to realize pay opportunities without necessarily having earned them through strong performance.
  • The company has not disclosed specific, quantifiable performance target objectives for the CEO. Disclosure of performance metrics is essential for investors to assess the rigor of incentive programs.
  • The company pays long-term incentives to executives without requiring the company to perform above the median of its peer group. Incentive plans that pay for mediocre performance undermine the linkage between pay and performance.
  • 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.

With above median relative pay, below average stock performance and the above issues, I voted against the pay package and stock plan.

Premiere Global Services: 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: John R. Harris (chair) and K. Robert Draughon.  

Premiere Global Services: Accounting

I voted in favor of ratifying Premiere Global Services’s auditor, since less than 25 percent of total audit fees paid appear attributable to non-audit work.

Shareholder Proposals at Premiere Global Services

None.

CorpGov Recommendations for Premiere Global Services – Votes Against Board Position in Bold

Proposal CorpGov CalSTRS CBIS
1.1 Elect Boland T. Jones For For Withhold
1.3 Elect K. Robert Draughon Withhold For Withhold
1.5 Elect W. Steven Jones For For Withhold
1.7 Elect J. Walker Smith, Jr. For Withhold Withhold
3 Ratification of Auditor For For Against

SharkRepellentGovernance Issues at Premiere Global Services

Looking at SharkRepellent.net for provisions unfriendly to shareowners:

  • Unanimous written consent.
  • Special meetings can only be called by shareholders holding not less than 75% of the voting power.
  • Supermajority vote requirement (75%) to amend all bylaw provisions.

Premiere Global Services Proxy Proposal Deadline for Next Year

Mark your calendar to submit future proposals:

Under Rule 14a-8(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, proposals of shareholders intended to be presented at the 2016 annual meeting of shareholders must be received by us on or before January 5, 2016 to be eligible for inclusion in our proxy statement and proxy card related to that meeting. Only proper proposals under Rule 14a-8 of the Exchange Act that are timely received will be included in the proxy statement and proxy card for our 2016 annual meeting of shareholders.

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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