Nanostring Technologies 2022

Nanostring Technologies 2022 Proxy Score 17

Nanostring Technologies 2022 annual meeting is June 17, 2022, at 9:00 am Pacific. It is a virtual-only meeting on the Broadridge platform. Of course, I (James McRitchie) 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 Dana Rollison, William D. Young, Pay, Stock Plan. Vote For Declassify the Board of Directors.

NanoString Technologies, Inc. develops, manufactures, and sells tools for scientific and clinical research in the fields of genomics and proteomics in the Americas, Europe, the Middle East, and the Asia Pacific. Below, is how I voted and why in a much shorter format than I’ve used in prior years since I am pressed for time.

I voted with the Board’s recommendations 17% of the time, so Proxy Score 17 out of 100. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A).

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

Nanostring Technologies 2022: ISS Rating

From the Yahoo Finance profile page: NanoString Technologies, Inc.’s ISS Governance QualityScore as of May 1, 2022, is 7. The pillar scores are Audit: 9; Board: 3; Shareholder Rights: 7; Compensation: 9.

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.

Nanostring Technologies 2022: CorpGov Recommendations

Calvert CorpGov
1.1Elect Director Dana Rollison

Rationale: The board comprises fewer than two people of color or is less than 40% diverse overall and candidate is on nominating committee
Withhold Withhold
1.2Elect Director William D. Young

Rationale: The board comprises fewer than two people of color or is less than 40% diverse overall, CEO pay too high. Candidate is on nominating & compensation committees
Withhold Withhold
2Ratify Ernst & Young LLP as Auditors

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

Rationale: CEO pay exceeds the 75th percentile of peers and the company’s performance is below the 75th percentile of the peer group. A vote AGAINST this proposal is warranted. Following adjustments made last year to the FY19 equity grants, the committee then also adjusted goals for the FY20-21 grants. While the changes to goals for the FY19 awards cited both the COVID-19 pandemic and a corporate transaction, adjustments made in FY21 were only pandemic-related. Investors may question the decision to make consecutive adjustments to long-term incentive awards, particularly as those adjustments have contributed to a pay-for-performance misalignment for the year in review.
4Approve Omnibus Stock Plan

Rationale: The plan’s dilution exceeds 10 percent. Based on evaluation of the estimated cost, plan features, and grant practices using the Equity Plan Scorecard (EPSC), a vote AGAINST this proposal is warranted due to the following key factors: – The plan cost is excessive; – The estimated duration of available and proposed shares exceeds six years; – The plan permits liberal recycling of shares; and – The plan allows broad discretion to accelerate vesting.
5Declassify the Board of Directors

Rationale: A vote FOR this proposal is warranted because the declassification would enhance board accountability.

Nanostring Technologies 2022: Board Proposals

CEO pay at $5.8M is high for a small-cap. That is just too much. Additionally, the CEO-to-worker pay ratio was 43:1. I voted AGAINST Executive Compensation and members of the Compensation Committee (William D. Young). Board lacks diversity. I voted against members of the Nominating committee (Dana Rollison and William D. Young)
Ernst & Young LLP has been Nanostring Technologies’ auditor for only 2 years. At some point, auditors can lose their independence if the relationship is too long. I voted For.
Omnibus Stock plan is too dilutive and unaligned with performance. I voted Against.

Nanostring Technologies 2022: Shareholder Proposal – Declassify the Board

Agenda item #5 is a very simple proposal. It asks that we elect directors every year. The Board makes no recommendation.Annual elections are widely viewed as a best practice. Most investors believe the annual election of each director makes directors more accountable, thereby improving performance and increasing company value. For example, our largest shareholder, Fidelity, believes that, in general, classified boards are not as accountable to shareholders as declassified boards. Our second-largest shareholder, Wellington Management, writes, “Shareholders’ ability to elect directors annually is an important shareholder right so we support proposals to enable annual director elections and declassify a board.”

Shareholder resolutions on this topic won 16 of 18 votes at companies in 2019, 2020, and 2021, most by a wide margin.

BlackRock, Vanguard, State Street, and other large funds have policies to vote in favor of declassifying boards.

Let’s incentivize our directors to be more accountable to shareholders. Vote FOR proposal #5. Thank you.

Other Recommendations

I am voting early. Before voting, you might want to look up a few fund votes in our Shareowner Action Handbook

Nanostring Technologies 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 special meetings
  • Unopposed directors are elected by a plurality, so one vote
  • Supermajority requirements

Nanostring Technologies 2022: Mark Your Calendar

Stockholders may present proper 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 30, 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. Proposals should be addressed to:
NanoString Technologies, Inc.
Attention: Corporate Secretary
530 Fairview Avenue North
Seattle, WA 98109

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