Alarm.com Holdings 2021 annual meeting is June 9, 6 AM Pacific Time. To attend, vote, and submit questions during the Annual Meeting visit here. You will need the 16-digit control number provided on your proxy card or voting instruction form. Warning: You will need to obtain a legal proxy and upload it at least 2-3 days before the meeting if you want to vote at the meeting. I recommend voting in advance. To enhance long-term value. Vote AGAINST the Auditor: FOR all other items, including Elect Directors by Majority Vote.
Alarm.com Holdings, Inc. provides cloud-based solutions for smart residential and commercial properties in the United States and internationally. Most shareholders do not vote. Reading through 65+ 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 several minutes of reading. See how I voted my ballot. Voting will take you only a minute or two. Every vote counts.
Alarm.com Holdings 2021: ISS Ratings
Alarm.com Holdings, Inc.’s ISS Governance QualityScore as of April 30, 2021, is 8. The pillar scores are Audit: 2; Board: 9; Shareholder Rights: 6; Compensation: 8.
Alarm.com Holdings 2021: Board Proposals
Egan-Jones Proxy Services recommends For all. However, E-J does not consider directors who served for longer than 10 years independent. Therefore, if Hugh Panero were up for election, they would recommend against him. I would also vote against McAdamm Shattuck, and Evans who are on the Nominations committee yet have found only one woman for our Board.
Vote: FOR All.
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. PricewaterhouseCoopers as served for 12 years. No other issues appear significant
Alarm.com Holdings Summary Compensation Table shows the highest paid named executive officer (NEO) was CEO Stephen Trundle at $1.9 M. I’m using Yahoo! Finance to determine market cap ($4.2 B) and I define large-cap as $10B, mid-cap as $2-10B, and small-cap as less than $2B. Alarm.com is a mid-cap company, but barely.
According to MyLogIQ, the median CEO compensation at mid-cap corporations was $6.4 M in 2020. CEO Stephen Trundle at $1.9 M is below that amount. Alarms.com shares out-performed mid-caps over the most recent one-, two-year, 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 18 to 1.
Egan-Jones Proxy Services found pay aligned with the long-term interest of its shareholders. They recommend voting For.
This good corporate governance proposal comes from me, James McRitchie, so of course I voted FOR. Egan-Jones also recommends For. They wrote,
Majority vote requirements in boardroom elections enhance director accountability to shareholders and director accountability is the hallmark of good governance. The board election process should ensure that shareholder expressions of dissatisfaction with the performance of directors have real consequences. A majority-vote standard will transform the director election process from a symbolic gesture to a process that gives meaningful voice to shareholders.
Under our Company’s current voting system, a director can be elected if all shareholders oppose the director but one shareholder votes FOR, even by mistake. More than 90% of the companies in the S&P 500 have adopted majority voting for uncontested elections. If a director cannot get a majority vote when running unopposed, something is drastically wrong. Why would we want zombie directors representing us on the Board?
Last year, my proposal requesting declassification of the Board won 62% of the vote. This year, the Board is sponsoring a similar resolution but this on is not just advisory. As Egan-Jones notes, “We prefer that the entire board of a company be elected annually to provide appropriate responsiveness to shareholders.” My proposal to eliminate supermajority requirements won 65% of the vote in 2019. The Board put that up to a vote last year and it passed.
Alarm.com 2021: How Others Voted
Proxy Insight reported the votes of Calvert when I last checked. (see below)
I looked up a few funds in our Shareowner Action Handbook. Calvert voted Against the Board and Pay for lack of diversity; For all othr items. CBIS voted Against the auditor, For all other items. Norges voted For all items.
- Directors: FOR both.
- Auditors: AGAINST.
- Executive Pay: FOR.
- Elect Directors by Majority Vote: FOR.
- Amend Certificate of Incorporation to Declassify our Board of Directors: FOR.
Alarm.com 2021: Issues for Future Proposals
Looking at insightia for anti-shareholder provisions:
- Board includes only one woman.
- No requirement to separate CEO and Chair.
- Plurality standard to elect unopposed directors.
- Written consent rights not afforded to shareholders.
- No proxy access.
- Special meetings cannot be called by shareholders.
Alarm.com 2022: Mark Your Calendar
To be considered for inclusion in next year’s proxy materials, you must submit your proposal, in writing, by December 30, 2021, to our Corporate Secretary c/o Alarm.com Holdings, Inc., 8281 Greensboro Drive, Suite 100, Tysons, Virginia 22102. You must comply with all applicable requirements of Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).e requirements set forth in our bylaws.
Be sure to vote for each item on the proxy. Any items left blank get automatically 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.