The Progenics Pharmaceuticals 2018 annual meeting is June 13. Vote AGAINST Crowley and Kishbauch, the stock incentive plan and FOR proxy access amendments to enhance long-term shareholder value. Vote to make our great company even better.
Progenics Pharmaceuticals, Inc. (PGNX) develops medicines and other technologies to target and treat cancer in the United States and abroad. Most shareholders do not vote. Reading through 50+ pages of the proxy takes too much time. Your vote will make only a small difference. Below, I tell you how I voted and why.
If you have read these posts related to my portfolio and proxy proposals for the last 22 years and trust my judgment, skip the 9 minute read. See how I voted my ballot. Voting will take you only a minute or two. Every vote counts.
Progenics Pharmaceuticals 2018: ISS Rating
From the Yahoo Finance profile: Progenics Pharmaceuticals, Inc.’s ISS Governance QualityScore as of May 1, 2018 is 1. The pillar scores are Audit: 2; Board: 2; Shareholder Rights: 1; Compensation: 7.
Progenics Pharmaceuticals 2018 Proxy Voting Guide: Board Proposals
1. Progenics Pharmaceuticals 2018: Directors
Egan-Jones Proxy Services recommends For all board nominees, except (1A) Peter J. Crowley and (1E) Michael D. Kishbauch. Both are members of the compensation committee, which recommends a Performance Incentive Plan fails their dilution model.
Vote AGAINST Crowley and Kishbauch.
2. Progenics Pharmaceuticals 2018: Executive Compensation
Progenics Pharmaceuticals’ Summary Compensation Table shows the highest paid named executive officer (NEO) was CEO Mark R. Baker at $2.3M. I’m using Yahoo! Finance to determine market cap ($648M) and I define large-cap as $10B, mid-cap as $2-10B, and small-cap as less than $2B. Progenics Pharmaceuticals is a small-cap company.
According to the Equilar Top 25 Executive Compensation Survey 2015, the median CEO compensation at small-cap corporations was $3M in 2014. Progenics Pharmaceuticals shares outperformed the NASDAQ over the most recent one and two year time periods, but underperformed over the most recent five year time period. The ratio of the annual total compensation of the CEO to the median of the annual total compensation of all employees was 10 to 1.
Egan-Jones Proxy Services uses a proprietary rating compensation system to measures wealth creation in comparison to other companies. “Neutral” is their compensation rating for Progenics Pharmaceuticals. They recommend a vote For the say-on-pay item.
Given below median pay, above average performance and a low CEO to median employee pay ratio:
3. Progenics Pharmaceuticals 2018: Ratify Auditors
I have no reason to believe the auditor engaged in poor accounting practices or has a conflict of interest. Egan-Jones recommends voting against the auditor if they served for seven years. Independence becomes compromised by that time. The Progenics auditor served less than seven years and no other issues are significant.
4. Progenics Pharmaceuticals 2018: Stock Incentive Plan
Egan-Jones notes a number of issues. Stock dilution was paramont.
Progenics Pharmaceuticals 2018: Shareholder Proposals
5. Shareholder Proposal: Proxy Access
This is my proposal. (James McRitchie) Progenics adopted a ‘lite’ form of proxy access after my 2015 filing. Some credit is due, since the bylaws allow shareholders the right to nominate up to 2 or 25% of the board. That is better than a standard of 2 or 20%, which is common. Still, the proposal is definitely ‘lite,’ since it limits nominating groups to 20 members, instead of having no cap. The current bylaws also prohibit nominees who did not receive at least 25% of the votes cast in favor, if nominated previously.
Egan-Jones recommends a vote For. The Board takes issue with my argument:
In support of his position, the proponent suggests that the 20-stockholder limitation could preclude proxy access by even the largest institutional investors, citing an analysis by the Council of Institutional Investors (“CII”), claiming that “even if the 20 largest public pension funds were able to aggregate their shares, they would not meet the 3% criteria at most of [the] companies examined by [CII].”
However, the proponent’s suggestion—and the CII statement—are irrelevant and misleading when applied to the Company’s stockholders. The aggregate holdings of the 20 largest public pension funds in the world reach into the trillions of dollars. Any one of them, much less all 20, have the resources to take a 3% stake in the Company’s common stock…
Yes, public pensions could take a 3% stake in Progenics, as the Board argues above. However, doing so would run afoul of 3.07(f)(vi) of the bylaws. According to that subdivision, Eligible Stockholders using proxy access must have “acquired the Required Shares in the ordinary course of business and not with the intent to change or influence control of the Corporation.”
Funds are in a Catch 22 situation. If they do not acquire at least 3%, they cannot submit proxy access nominees. If they acquire 3% for the purpose of submitting a proxy access nominee, they are ineligible.
Proxy Democracy is still down. I seek contributions to bring it back to life. Proxy Democracy provided information on votes cast in advance of annual meetings by institutional investors at thousands of companies. If you think that is worthy of financial support, please contact me.
Proxy Insight reported on Teacher Retirement System of Texas and Calvert. Teacher voted FOR all items, including my shareholder proposal. Calvert voted against Kishbauch and Williams, as well as executive pay and the stock incentive plan. In looking up funds on our Shareowner Action Handbook, CBIS voted AGAINST all directors and the auditor; FOR all other items. CalSTRS voted AGINST Crowley, Kishbauch and Williams, as well the stock incentive plan; FOR all other items.
- Directors: AGAINST Crowley and Kishbauch.
- Ratify Executive Pay: FOR.
- Auditor: FOR.
- Stock Incentive Plan: AGAINST.
- Enhance Proxy Access: FOR.
Progenics Pharmaceuticals 2018: Issues for Future Proposals
Looking at SharkRepellent.net for anti-shareholder provisions:
- Special meetings can only be called by shareholders holding not less than 50.1% of the voting power.
- Proxy access ‘lite’ provisions whereby a shareholder or group limited to only 20 shareholders holding at least 3% of the outstanding common stock continuously for at least three (3) years may nominate directors, so long as the number of directors elected via proxy access does not exceed two or 25% of the board, whichever is greater. Nominees who receive less than 25% of the votes would be ineligible for nomination under the proxy access provision for the next two (2) annual meetings. (These anti-shareholder provisions could be eliminated if shareholders vote for #5 above and the Board implements.)
Progenics Pharmaceuticals 2018: Mark Your Calendar
SEC rules provide that certain stockholder proposals must be included in the Proxy Statement for our Annual Meeting. For a proposal to be considered for inclusion in next year’s Proxy Statement, it must be submitted in writing to our Corporate Secretary no later than December 28, 2018.
You may contact us by writing ℅ the Corporate Secretary at our corporate headquarters located at One World Trade Center, 47th Floor, Suite J, New York, NY 10007.
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,” chosen by aspiration. 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. For more on the subject, see CEO Pay Machine Destroying America.