Impinj 2022

Impinj 2022 Proxy Score 44

Impinj 2022 annual meeting is June 9, 2022, at 9:00 am Pacific. It is a virtual-only meeting on the Lumi platform, requiring street name shareholders to obtain a “legal proxy.” I doubt anyone will go through that bother. Of course, I recommend voting in advance, especially since many companies cut off voting as soon as proposals have been presented. To enhance corporate governance and long-term value, vote Against Gibson, Padval, Sanghi, Pay. Vote For #5 Amend Proxy Access.

Impinj, Inc. operates a cloud connectivity platform in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. Its platform, which comprises multiple product families, wirelessly connects individual items and delivers data about the connected items to business and consumer applications. Below, is how I (James McRitchie) voted and why.

I voted with the Board’s recommendations 44% of the time, so Proxy Score 44 out of 100. 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.

Impinj 2022: ISS Rating

From the Yahoo Finance profile page: Impinj, Inc.’s ISS Governance QualityScore as of May 1, 2022, is 7. The pillar scores are Audit: 5; Board: 8; Shareholder Rights: 3; Compensation: 8.

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.

Impinj 2022: CorpGov Recommendations

Corpgov Calvert
1.1Elect Director Daniel Gibson

Rationale: The board comprises fewer than two women.–A vote AGAINST incumbent Governance Committee members Steve Sanghi, Daniel Gibson, and Umesh Padval is warranted given the board’s failure to remove, or subject to a sunset requirement, the supermajority vote requirement to enact changes to the bylaws, which adversely impacts shareholder rights.

ForAgainst
1.2Elect Director Umesh Padval

Rationale: The board comprises fewer than two women.–A vote AGAINST incumbent Governance Committee members Steve Sanghi, Daniel Gibson, and Umesh Padval is warranted given the board’s failure to remove, or subject to a sunset requirement, the supermajority vote requirement to enact changes to the bylaws, which adversely impacts shareholder rights.
ForAgainst
1.3Elect Director Steve Sanghi

Rationale: The board comprises fewer than two women.–A vote AGAINST incumbent Governance Committee members Steve Sanghi, Daniel Gibson, and Umesh Padval is warranted given the board’s failure to remove, or subject to a sunset requirement, the supermajority vote requirement to enact changes to the bylaws, which adversely impacts shareholder rights.
ForAgainst
1.4Elect Director Cathal Phelan

Rationale: A vote FOR the remaining director nominees is warranted.
ForFor
1.5Elect Director Meera Rao

Rationale: A vote FOR the remaining director nominees is warranted.
ForFor
2Ratify Ernst & Young LLP as Auditors

Rationale: In the absence of further concerns, a vote FOR is warranted.
ForFor
3Advisory Vote to Ratify Named Executive Officers’ Compensation

Rationale: A vote AGAINST this proposal is warranted. The company made certain positive changes to the LTI program in 2021, by implementing a multi-year performance period and granting PSUs that target relative TSR outperformance and cap vesting if absolute TSR is negative. However, the company does not disclose any quantified goals or actual results underlying the annual incentive metrics. Concerns are heighted as annual incentives were earned above target and the compensation committee utilized its discretion to increase payouts to maximum. In addition, the majority of long-term incentives lack performance conditions. I also voted against members of the compensation committee up for election: Umesh Padval.
ForAgainst
4Advisory Vote on Say on Pay Frequency

Rationale: We support an annual shareholder advisory vote on compensation.
One YearOne Year
5Amend Proxy Access Right

Rationale: A vote FOR this proposal is warranted as the proposed elimination of the 20-shareholder aggregation limit would improve the company’s existing proxy access right for shareholders.
FORFor

Impinj 2020: Board Proposals

CEO pay at $5.9M is too high for a small-cap company. I voted AGAINST Executive Compensation and the only member of the Compensation Committee (Padval) up for election.
Ernst & Young LLP has only been the Impinj auditor for 2 years, so should be considered independent. More information above is in the write-up from Calvert.

Impinj 2020: Shareholder Proposal on Proxy Access

As my proposal #5 on proxy access states: “the most essential feature requested is that shareholders forming a nominating group not be limited with regard to the number in a participating group.”

As cited in the proposal Proxy Access in the United States, a cost-benefit analysis by CFA Institute, found proxy access would “benefit both markets and boardrooms, raising US market capitalization by up to $140 billion.

The Impinj Board filed a weak form of proxy access bylaws after reviewing my proposal, limiting nominating groups to 20 shareholders. The opposition statement contends shareholders now have “a robust proxy access right.”

However, such a statement lacks credibility. Most of our top stockholders have a business model based on low costs. They’ve never filed a shareholder proposal, so are highly unlikely to go through the expense of proxy access.

The CFA study estimating a $140B rise in market cap was based on proxy access having no limit on the number in participating groups. The Board’s opposition statement says proxy access should be limited to “appropriately sized group of stockholders.” As a result of similar widespread limitations, proxy access has only been used once — to return a founder to a board. The anticipated $140B in economic benefits has failed to materialize.

Limiting groups to 20-members does not provide a proxy access right, it provides a proxy access illusion. Vote FOR proposal #5 real proxy access. Only real proxy access will motivate current directors to work on behalf of shareholders.

Other Recommendations

In looking up a few funds in our Shareowner Action Handbook, I see few funds have reported their votes. However, if you check back on June 6th, you will probably find several.

Impinj 2022: Issues for Future Proposalsinsightia

Looking at insightia for anti-shareholder provisions:

  • No requirement to separate CEO and Chair
  • Shareholders cannot take action by written consent or call a special meeting
  • Supermajority provisions

Impinj 2023: Mark Your Calendar

Stockholders may present proposals for inclusion in our proxy statement and for consideration at the next annual meeting of stockholders by submitting their proposals in writing to our corporate secretary in a timely manner. For a stockholder proposal to be considered for inclusion in our proxy statement for our 2023 annual meeting of stockholders, our corporate secretary must receive the written proposal at our principal executive offices not later than December 28, 2022. In addition, stockholder proposals must comply with the requirements of Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Stockholders should address proposals to: Impinj, Inc.,
Attention: Corporate Secretary
400 Fairview Avenue North, Suite 1200,
Seattle, WA 98109

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Warnings

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.

   

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