Broadridge Financial Solutions, Inc. (BR) is a provider of investor communications and technology-driven solutions to banks, broker-dealers, mutual funds and corporate issuers. They are one of the stocks in my portfolio. Their annual meeting is on November 12, 2015. ProxyDemocracy.org had collected the votes of two funds when I checked and voted. I voted with the Board’s
recommendations 64% of the time. View Proxy Statement.
Read Warnings below. What follows are my recommendations on how to vote the proxy in order to enhance corporate governance and long-term value.
Broadridge Financial Solutions: ISS Rating
From Yahoo! Finance: Broadridge Financial Solutions, Inc.’s ISS Governance QuickScore as of Oct 1, 2015 is 1. Scores range from “1” (low governance risk) to “10” (higher governance risk). The pillar scores are Audit: 1; Board: 1; Shareholder Rights: 2; Compensation: 2. 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 and Compensation.
Broadridge Financial Solutions: Compensation
Broadridge Financial Solutions’ Summary Compensation Table shows the highest paid named executive officer (NEO) was CEO Richard J. Daly at about $17.3M. I’m using Yahoo! Finance to determine market cap ($7B) and Wikipedia’s rule of thumb regarding classification.Broadridge Financial Solutions 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 pay is well above that. Broadridge Financial Solutions’ shares outperformed the S&P 500 over the most recent one, two, five and ten periods.
The MSCI GMIAnalyst report I reviewed gave Broadridge Financial Solutions an overall grade of ‘C.’ According to the report:
- 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.
Even though performance was substantially above average, pay was even more so. Therefore, I voted against the pay package. As is my practice, I also voted against members of the compensation committee because they recommended the pay package to the board: Alan J. Weber, Chair, Robert N. Duelks, and Maura A. Markus.
Broadridge Financial Solutions: Accounting
There is no reason to believe the auditor has rendered an inaccurate opinion or is engaged in poor accounting practices. I voted for the auditor.
Broadridge Financial Solutions: Board Proposals
As indicated above, I voted against the pay plan and several directors.
Broadridge Financial Solutions: Shareholder Proposals
None. Although I submitted a proxy access proposal, Broadridge preempted the shareholder’s meeting by adopting a lighter version of proxy access. I agreed to withdraw my proposal because I viewed even their lite version as substantial progress. See my post Broadridge Adopts Proxy Access: Another Victory.
Broadridge Financial Solutions: CorpGov Recommendations 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 | Against | For | For |
| 1d | Elect Director Richard J. Haviland | For | For | For |
| 1e | Elect Director Brett A. Keller | For | For | For |
| 1f | Elect Director Stuart R. Levine | For | For | For |
| 1g | Elect Director Maura A. Markus | Against | For | For |
| 1h | Elect Director Thomas J. Perna | For | For | For |
| 1i | Elect Director Alan J. Weber | Against | For | For |
| 2 | Ratify Named Executive Officers’ Compensation | Against | For | For |
| 3 | Ratify Deloitte & Touche LLP as Auditors | For | For | Against |
Broadridge Financial Solutions: Issues for Future Proposals
Looking at SharkRepellent.net for provisions unfriendly to shareowners:
- 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.
Broadridge Financial Solutions: Mark your Calendar
Any stockholder who desires to have a proposal considered for presentation at the 2016 annual meeting of stockholders, and included in the proxy statement and form of proxy used in connection with our 2016 annual meeting, must submit the proposal in writing to our Secretary so that it is received no later than June 4, 2016. The proposal must also 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 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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