3D Systems 2021 annual meeting is May 18, 11 AM Pacific Time. To attend, vote, and submit questions during the Annual Meeting visit here. To participate, you will need the 16-digit control number provided on your proxy card or voting instruction form. Of course, I recommend voting in advance. To enhance long-term value. Vote AGAINST Curran, Humes, Kever, McClure, Moore, Auditor, and Pay. Vote FOR Written Consent.
3D Systems Corporation, through its subsidiaries, provides 3D printing and digital manufacturing solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company was founded in 1986 and is headquartered in Rock Hill, South Carolina. Most shareholders do not vote. Reading through 63+ pages of the proxy takes time but 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 25 years and trust my judgment, skip 7 minutes of reading. See how I voted my ballot. Voting will take you only a minute or two. Every vote counts.
3D Systems 2021: ISS Ratings
3D Systems Corporation’s ISS Governance QualityScore as of April 30, 2021, is 1. The pillar scores are Audit: 1; Board: 5; Shareholder Rights: 1; Compensation: 5.
3D Systems 2021: Board Proposals
Egan-Jones Proxy Services recommends against William E. Curran, William D. Humes, Jim D. Kever, Charles G. McClure, Jr., and Kevin S. Moore. Those directors either: 1. served for longer than 10 years, so are not independent; 2. served on the compensation committee, recommending unaligned pay; or 3. Served as Chair allowing cybersecurity risks.
Vote: AGAINST William E. Curran, William D. Humes, Jim D. Kever, Charles G. McClure, Jr., and Kevin S. Moore
2. Executive Compensation
3D Systems’ Summary Compensation Table shows the highest paid named executive officer (NEO) was CEO Jeffrey Graves at $5.9M. I’m using Yahoo! Finance to determine market cap ($2.3B) and I define large-cap as $10B, mid-cap as $2-10B, and small-cap as less than $2B. 3D Systems is a small-cap company.
According to MyLogIQ, the median CEO compensation at small-cap corporations was $3.8 M in 2020. CEO Jeffrey Graves at $5.9M is above that amount. 3D Systems’ shares outperformed small-caps over the most recent one- and two-year time periods but underperformed during the latest 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 94 to 1.
Egan-Jones Proxy Services found pay not aligned with the long-term interest of its shareholders. They recommend voting Against.
3. 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. BDO USA LLP has served for 18 years. No other issues appear significant
3D Systems 2021: Shareholder Proposals
4. Reduce Ownership Required for a Special Meeting
This good corporate governance proposal requesting a threshold of 15% to call special meetings comes from Myra Young, written by me, James McRitchie, so of course I voted FOR. Egan-Jones recommends Against. We have already won something of a victory since the Board reduced the threshold for special meetings from 50% to 25% after we submitted our proposal.
Shareholders should take into consideration that 25% of shares are not voted at 3D Systems meetings. Requiring 25% of shares to call a special meeting is, therefore, a high burden, since that would be one-third of all shares voted. Shareholders who do not bother to vote should be excluded in considering special meeting requirements. A similar proposal by my wife, Myra Young, on the same subject requesting the same threshold won 49% of the vote two years ago.
Proxy Insight reported no votes when I last checked.
In looking up a few funds in our Shareowner Action Handbook, Calvert voted Against Clinton, Erickson, Kever, Wadsworth, and Pay; For all other items. CBIS voted For all items. Norges voted Against Kever and Special Meetings.
- Directors: AGAINST Curran, Humes, Kever, McClure, and Moore
- Executive Pay: AGAINST
- Auditor: AGAINST
- Shareholder Proposal Reduce Ownership Required for a Special Meeting: FOR
3D Systems 2021: Issues for Future Proposals
Looking at insightia for anti-shareholder provisions:
- Only 8% (1) of Directors are Women
- The average tenure of directors exceeds the average, which likely reduces independence.
3D 2022: Mark Your Calendar
Stockholder proposals for inclusion in the proxy for the 2022 Annual Meeting of Stockholders must be recieved by December 9, 2021. If our 2022 Annual Meeting moves by more than 30 days from the anniversary of the 2021 Annual Meeting, a reasonable time before we begin to print is required.
Be sure to vote for each item on the proxy. Any items left blank get 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.” Peer groups are often chosen by aspiration. The “Lake Woebegone effect” may be nice in fictional towns, “where all the children are above average.” However, corporations live in the real world. All CEOs are above average. Ignoring that fact partly explains why their collective pay spiraling out of control. We need to slow the pace of money going to the 1% or our economy will fail to serve the majority. The rationale for peer group benchmarking is a mythological market for CEOs. For more on the subject, see CEO Pay Machine Destroying America.