American Tower 2019

American Tower 2019 Proxy Guide

American Tower 2019 annual meeting – May 21st. Vote AGAINST Dolan, Reeve, Sharbutt, Taiclet. Exec Pay, & Auditor. Vote FOR Independent Director and Disclose Political Contributions.

American Tower (AMT), one of the largest global REITs, is a leading independent owner, operator and developer of multitenant communications real estate with a portfolio of approximately 171,000 communications sites. Most shareholders do not vote.  Reading through 83+ pages of the proxy takes too much time. Your vote could be crucial. Below, how I voted and why.

If you have read these posts related to my portfolio and proxy proposals for the last 24 years and trust my judgment, skip the 8 minute read. See how I voted my ballot. Voting will take you only a minute or two. Every vote counts.

I voted with the Board’s recommendations 43% of the time. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A).

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

American Tower 2019: ISS Rating

From the Yahoo Finance profile:

American Tower Corporation (REIT)’s ISS Governance QualityScore as of April 1, 2019 is 2. The pillar scores are Audit: 1; Board: 4; Shareholder Rights: 2; Compensation: 7.

Corporate governance scores courtesy of Institutional Shareholder Services (ISS). Scores indicate decile rank relative to index or region. A decile score of 1 indicates lower governance risk, while a 10 indicates higher governance risk. We need to pay close attention to Compensation issues.

American Tower 2019 Proxy Voting Guide: Board Proposals

1. American Tower 2019: Directors

Egan-JonesEgan-Jones Proxy Services recommends Against (1A) Raymond P. Dolan and (1H) David E. Sharbutt for lack of independence after serving on the board for over 10 years (16 and 13 years respectively). They also recommend against  (1I) James D. Taiclet for failing to adequately address cybersecurity issues. I see Pamela Reeve has been a director since 2002, so should also be turned out because she cannot really be independent as lead director after all that time served.

Vote AGAINST Dolan, Reeve, Sharbutt, and Taiclet.

2. American Tower 2019: Ratification of Independent Auditor

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. Deloitte & Touche, has served more than seven years. No other issues appear significant.

Vote AGAINST.

3. American Tower 2019: Executive Compensation

American Tower’s Summary Compensation Table shows the highest paid named executive officer (NEO) was Chairman of the Board, President, and CEO James D. Taiclet at $14.3M. I’m using Yahoo! Finance to determine market cap ($89.5B) and I define large-cap as $10B, mid-cap as $2-10B, and small-cap as less than $2B. American Tower is a large-cap company.

mylogiq logoAccording to the Equilar Top 25 Executive Compensation Survey 2015, the median CEO compensation at large-cap corporations was $10.3M in 2014. According to MyLogIQ median CEO pay for S&P 500 companies was $12.3M last year. Mean was $14.2M. American Tower shares outperformed the S&P 500 over the most recent one, two, and five year time periods. The ratio of the annual total compensation of the CEO to the median of the annual total compensation of all employees was 282 to 1.

Egan-Jones Proxy Services uses a proprietary rating compensation system to measures wealth creation in comparison to other companies. They believe the company’s compensation policies and procedures are centered on a competitive pay-for-performance culture, aligned with the long-term interest of its shareholders and necessary to attract and retain experienced, qualified executives critical to the Company’s long-term success and the enhancement of shareholder value.

Given far above median pay, a high pay ratio and my concern for growing wealth inequality, I voted against. However, since it was a borderline decision, I did not vote against the compensation committee.

Vote AGAINST.

American Tower 2019: Shareholder Proposals

4. Independent Board Chairman

This good governance proposal comes from John Chevedden. Egan-Jones notes, “there is an inherent potential conflict, in having an Inside director serve as the Chairman of the board. Consequently, we prefer that companies separate the roles of the Chairman and CEO and that the Chairman be independent to further ensure board independence and accountability. ” They recommend For.

Vote FOR.

5. Shareholder Proposal: Disclosure of Political My

This good governance proposal comes from me, James McRitchie on behalf of my wife Myra Young, so of course we voted FOR. Egan-Jones disagrees. The Company argues they comply with the laws. However, they laws allow dark money contributions.

Vote: FOR

American Tower 2019 CorpGov RecommendationsProxy Insight

Proxy Insight had reported the votes of eight funds as I wrote up my recommendations.  See chart at the top of this post. (click top image to expand)  

You may find more votes using our Shareowner Action Handbook.

CorpGov Votes:

  1. Directors: AGAINST: Dolan, Reeve, Sharbutt, and Taiclet.
  2. Executive Pay: AGAINST.
  3. Auditor: AGAINST.
  4. Independent Director: FOR
  5. Disclose Political Contributions: FOR

American Tower 2019: Issues for Future Proposals

SharkRepellentLooking at SharkRepellent.net for anti-shareholder provisions:

  • Special meetings can only be called by shareholders holding not less than 25% of the voting power.
  • Proxy access lite with 20 member limit.

American Tower 2019: Mark Your Calendar

Pursuant to Rule 14a-8 of the Exchange Act, we must receive any stockholder proposal intended to be presented at our 2020 Annual Meeting of Stockholders by no later than December 12, 2019, if it is to be included in the proxy statement and form of proxy relating to the meeting. Any such proposal must also comply with the other requirements of Rule 14a-8.

American Tower Corporation, 116 Huntington Avenue, Boston, Massachusetts 02116, Attention: Secretary

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,” 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.

   

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