Visa (V): How I Voted – Proxy Score 53

VisaVisa Inc (V), a payments technology company, operates an open-loop payments network worldwide. The company facilitates commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities. Visa is one of the stocks in my portfolio. Their annual meeting is on February 3, 2016. had collected no votes when I checked.  I voted against the pay plan, incentive plan, amendments and the compensation committee but with the Board’s recommendations 53% of the time. View Proxy Statement on iiWisdom.

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

Visa: ISS Rating

From Yahoo! Finance: Visa Inc.’s ISS Governance QuickScore as of Dec 1, 2015 is 5. The pillar scores are Audit: 2; Board: 1; Shareholder Rights: 8; Compensation: 2. Brought to us 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.

Visa: Compensation

Visa’s Summary Compensation Table shows the highest paid named executive officer (NEO) was Charles W. Scharf at $15.8M. I’m using Yahoo! Finance to determine market cap ($185.4B) and Wikipedia’s rule of thumb regarding classification. Visa is a large-cap company. According to the Equilar Top 25 Executive Compensation Survey 2015, the median CEO compensation at large-cap corporations was $10.3 million in 2014, so pay is well above that. Visa shares outperformed the S & P 500 over the most recent one, two, five, and ten year time periods.GMIAnalyst

The MSCI GMIAnalyst report I reviewed gave Visa 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. Disclosure of performance metrics is essential for investors to assess the rigor of incentive programs.

Given these issues and pay that was substantially above average, I voted against the pay plan, incentive plan, amendments and the compensation committee: Suzanne Nora Johnson (chair, who also sits on 4 boards… too many), Alfred F. Kelly, Jr., David J. Pang, and John A. C. Swainson. 

Visa: Accounting

I have no reason to believe the auditor has rendered an inaccurate opinion or is engaged in poor accounting practices, so voted to confirm.

Visa: Board Proposals

I voted against the pay plan, incentive plan, amendments and the directors on the compensation committee:

Visa: Shareholder Proposals

None. I withdrew my proxy access proposal after reaching agreement with the company.

Proxy InsightVisa: CorpGov Recommendations Below – Votes Against Board Position in Bold

I also checked with Proxy Insight. They had votes reported by Calvert, Christian Brothers Investment Services, Trillium Asset Management, the Teacher Retirement System of Texas (voted For on all proposals), Canada Pension Plan Investment Board and the Unitarian Universalist Common Endowment Fund.

1aLloyd A. CarneyForForForForForFor
1bMary B. CranstonForForForForForFor
1cFrancisco Javier Fernandez-CarbajalForForForForForAgainst
1dAlfred F. Kelly, Jr.AgainstForForForForFor
1eRobert W. MatschullatForForForForForFor
1fCathy E. MinehanForForForForForFor
1gSuzanne Nora JohnsonAgainstForForForForFor
1hDavid J. PangAgainstForForForForFor
1iCharles W. ScharfForForForForForFor
1jJohn A. C. SwainsonAgainstForForForForFor
1kMaynard G. Webb, Jr.ForForForForForAgainst
2Ratify NEO CompensationAgainstAgainstForAgainstForFor
3Amend Omnibus Stock PlanAgainstForAgainstAgainstForFor
4Amend Exec Incent Bonus PlanAgainstForForForForFor
5Ratify KPMG LLP as AuditorsForForAgainstForForFor

Visa: Issues for Future Proposals

Looking at for provisions unfriendly to shareowners:

  • Three voting classes.
  • Shareholders cannot call special meetings.
  • No action can be taken without a meeting by written consent.
  • Proxy access provision whereby up to 20 stockholders holding at least 3% of outstanding Class A common stock continuously for at least three years may nominate directors constituting up to 20% of the board. Too limiting.

Visa: Mark Your Calendar

The submission deadline for stockholder proposals to be included in our proxy materials for the 2017 annual meeting of stockholders pursuant to Rule 14a-8 of the Exchange Act is August 13, 2016. All such proposals must be in writing and received by our Corporate Secretary at Visa Inc., P.O. Box 8999, San Francisco, CA 94128-8999 by the close of business on the required deadline in order to be considered for inclusion in our proxy materials for the 2017 annual meeting of stockholders. Submission of a proposal before the deadline does not guarantee its inclusion in our proxy materials.


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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