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Tag Archives | CEO pay

Compensation: The Difference it Makes

James McRitchie, March 12, 2018 ,

Compensation: The Difference it Makes

Compensation. Most Americans think CEOs of the 500 largest publicly traded corporations are overpaid, even though they think CEOs made less than a tenth of what they actually earn. The Rock Center for Corporate Governance at Stanford University conducted a nationwide survey of 1,202 individuals — representative by gender, race, age, political affiliation, household income, and state residence — to understand public perception of CEO pay levels among the Key takeaways are:

CEOs are vastly overpaid, according to most Americans
Most support drastic reductions
The public is divided on government intervention

Americans and CEO Pay: 2016 Public Perception Survey on CEO Compensation found 74% believe that CEOs are not paid the correct amount relative to the average worker. Only 16% believe that they are.

A brave panel tackled the topic, Compensation: The Difference it Makes, at the Corporate Directors Forums I attended in San Diego last month. Like all Corporate Directors Forums, this one operated under the Chatham House Rule, so you will not find any direct quotes below. These are my notes on Compensation: The Difference it Makes. As such, they include my opinions as well observations made by speakers panelists and others in attendance at the Forum. This is certainly not a transcript. However, I hope even those who attended the Forum will find the post useful, especially my attempt to provide additional context through links and commentary. Continue Reading →

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Pearl Meyer on CEO Pay Ratios

James McRitchie, October 24, 2017 ,

Pearl Meyer on CEO Pay Ratios: Pay Transparency is the New Black

Pearl Meyer on CEO pay ratios. The leading advisor to boards and senior management released its 2018 Looking Ahead to Executive Pay Practices survey but long before that, in May 2015, one of their principals declared Pay Transparency is the New Black. I guess that means pay transparency will be the next thing in corporate governance fashion. Or maybe like the TV series Orange is the New Black, we will have a lot of laughs along as CEO pay ratios are disclosed but we have a sinking sense this will not end well. Continue Reading →

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CII: Public Companies Endangered Species?

James McRitchie, September 21, 2017 ,

Public Companies Endangered Species: CII Panel

Are public companies an endangered species? If so, why? How can we solve that problem? At last week’s Council of Institutional Investors (CII) Fall Conference there as an informative panel discussion entitled Public Companies: An Endangered Species?

Panelists were David Brown, Michael Mauboussin, and Robert McCooey moderated by the always erudite and entertaining Frank Partnoy, one of the best facilitators in the corporate governance industry. Continue Reading →

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CEO Pay Machine Destroying America

James McRitchie, September 6, 2017 ,

The CEO Pay Machine: How it Trashes America and How to Stop it (Amazon) by Steven Clifford should be mandatory reading for all compensation committees and those who vote proxies for large funds. The book is easily read and understood by the layperson. It also includes the fact-based evidence needed to convince fiduciaries that voting against most executive pay packages is one of the first steps to restoring shareholder value, company sustainability and the very foundations of American democracy.

Why combine CEO and chair positions or pay executives with options when both practices lead to poor results? We don’t except “everyone else does it” as an excuse for harmful behavior from our teenagers; why should we accept it as a reason from compensation consultants and the former CEOs sitting on most corporate boards? Clifford also outlines possible remedies but nothing will be done unless we shift public opinion. If widely read and discussed, The CEO Pay Machine could be central to change. Continue Reading →

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Starbucks (SBUX): Vote Proxy Access

James McRitchie, March 15, 2017 ,

Starbucks Corporation (NASD: SBUX), together with its subsidiaries, operates as a roaster, marketer, and retailer of specialty coffee worldwide. SBUX is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of four fund families when I checked and voted. Their annual meeting is coming up on March 22, 2017

I voted FOR Proxy Access Amendments. See how and why I voted other items below. I voted with the Board’s recommendations 50% of the time. View Proxy Statement via iiWisdom.

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

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Are We Paying CEOs Too Much?

James McRitchie, March 9, 2017 ,

Are we paying CEOs too much? Is the Pope Catholic? (That’s my own bad joke, not from the panelists.)

Executive compensation is front and center on the minds of shareholders, regulators—and politicians. What IS pay? What IS performance? What are the right time frames for measuring performance? And what to do about the perception that pay is not tied to performance?

I was less interested in our “perception” that pay is not tied to performance and more interested in the reality, where such discrepancies exist.

Are We Paying CEOs Too Much?

Are We Paying CEOs Too Much?

Are We Paying CEOs Too Much? is Part 5 of my coverage of the Corporate Directors Forum 2017 in San Diego @corpdirforum, which was billed as Directors, Management, & Shareholders in Dialogue. I was also hoping to learn more about President Donald J. Trump and how his administration might impact corporate governance. More about that in a future post. See Part I, Part 2, Part 3 and Part 4. As usual, the Directors Forum was under Chatham House Rule, so I’m mostly just posting a few observations and my reflections that I hope readers will find interesting.Much better photos from the professional photographer at Directors Forum 2017 Photo Slide Show. Continue Reading →

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Walt Disney Company: Proxy Score 25

Elizabeth Chang, March 2, 2017 ,

Walt Disney Company

Walt Disney Company: before you vote your proxy

The Walt Disney Company (NYSE:DIS), together with its subsidiaries, operates as an entertainment company worldwide.

The Walt Disney Company is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of three fund families when I checked and voted. Their annual meeting is coming up on March 8, 2017.

I voted FOR Proxy Access Amendments. See how and why I voted other items below. I voted with the Board’s recommendations only 25% of the time. View Proxy Statement via iiWisdom. Continue Reading →

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Qualcomm (QCOM) Proxy Access: Proxy Score 57

Elizabeth Chang, February 27, 2017 ,

QUALCOMM Incorporated (NASD:QCOM) develops, designs, manufactures, and markets digital communications products and services in China, South Korea, Taiwan, the United States, and internationally.

QCOM is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of two funds when I checked and voted. Their annual meeting is coming up on March 7th, 2017.

I voted AGAINST pay, comp committee members, auditor. FOR Proxy Access Amendments. See why below. I voted with the Board’s recommendations 57% of the time. View Proxy Statement via iiWisdom. Continue Reading →

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Walgreens Boots Alliance, Inc.: Proxy Score 33

Elizabeth Chang, January 23, 2017 ,

Walgreens Boots Alliance, Inc. (WBA) operates as a pharmacy-led health and wellbeing company. It operates through three segments: Retail Pharmacy USA, Retail Pharmacy International, and Pharmaceutical Wholesale.

Their annual meeting is coming up on January 26th, 2017. ProxyDemocracy.org had collected the votes of 3 fund families when I checked. I voted FOR proxy access and a report on sustainability and pay practices; AGAINST pay, compensation committee, auditor and financial expert. I voted with the Board’s recommendations 33% of the time. View Proxy Statement. See 1/25/2017 update. Continue Reading →

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CEO Pay Ratios: Do Employees Care?

James McRitchie, August 4, 2016 ,

CEO Pay Ratios: Mandated Reporting Approaches

Starting fiscal years beginning in January, companies must disclose CEO pay ratios to the median compensation of their employees. Companies have flexibility with regard to sampling and other methodologies, according to how the SEC has interpreted the Dodd-Frank Act. In preparation, PayScale and Equilar surveyed employee sentiment on CEO pay ratios.

CEO Pay Ratios: Employees Surveyed

Do employees know what their CEO earns? If so, do they think it’s fair? If they believe it’s not fair, does it negatively affect their perception of their employer? And, finally, does CEO pay have any effect on the ability of a company to retain its employees? Additionally, they asked some CEOs to weigh in with their thoughts on the SEC rule and their approach to employee communication as it pertains to executive pay.

Equilar provided pay data for some of the the highest-paid CEOs in the U.S. and PayScale provided median worker pay data for those same companies. They then calculated the CEO pay ratios between the CEO at each company and their employees. Many CEOs do receive substantial stock/option grants and perks as part of their compensation, but the firms don’t currently have similar data available for employees, so they looked solely at cash compensation to calculate ratios for this report. However, they did provide the Equilar data on Total CEO Pay as well, so that it’s clear how much of each CEO’s pay is in the form of cash vs. stock/options/perks. Continue Reading →

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BlackRock Inc: Proxy Score 59

James McRitchie, May 23, 2016 ,

BlackRock Inc

BlackRock Inc: Before You Vote Your Proxy

BlackRock Inc (NYSE:BLK) provides investment and risk management services to institutional and retail clients across the world. Its product offerings include single- and multi-asset class portfolios investing in equities, fixed income, alternatives and money market instruments..

Their annual meeting is coming up on May 25, 2016. ProxyDemocracy.org had collected the votes of three fund families when I checked. Vote AGAINST pay plan, compensation committee, director with poor attendance; FOR Proxy Access, Report on Proxy Voting and Executive Compensation. I voted with the Board’s recommendations 59% of the time. View Proxy Statement. Continue Reading →

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Analogic Corp: How I Voted – Proxy Score 80

Elizabeth Chang, January 12, 2016 ,

Analogic Corporation ($ALOG), a technology company, designs, manufactures, and sells medical imaging, ultrasound, and security systems and subsystems to original equipment manufacturers (OEMs) and end users in the healthcare and airport security markets worldwide. Analogic is one of the stocks in my portfolio. Their annual meeting is coming up on January 21, 2016. ProxyDemocracy.org had collected the votes of one fund when I checked. I voted with the Board’s recommendations 80% of the time, voting only against pay and pay chair as a warning for loose pay practices. View Proxy Statement.

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

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Reeds – REED: Reject the Board

Elizabeth Chang, December 18, 2015 ,

2nd update, 12/20/2015: Unpack your bags, cancel your flight and hotel. Reeds Inc. (REED) has postponed tomorrow’s annual meeting to 12/30/2015. Although the move may be costly to shareowners and our company, it may pay dividends in the long-run if REED finally starts paying more attention to shareowners, corporate governance and their legal obligations. REED made a material error in their proxy materials and ballot. Although they filed a revised proxy, they didn’t pay to send a new ballot or link to shareowners. The supplement they issued on Friday includes a new ballot but so far that has not gone out to most shareowners. I am hoping they will do so this week through Broadridge’s proxyvote.com platform. Continue Reading →

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Marrone Bio Innovations (MBII): How I Voted – Proxy Score 33

Elizabeth Chang, December 14, 2015 ,

Marrone Bio Innovations, Inc. $MBII provides bio-based pest management and plant health products for the agriculture, turf, and ornamental and water treatment markets in the United States and internationally. Marrone Bio is one of the stocks in my portfolio. Their annual meeting is on December 17, 2015. ProxyDemocracy.org had collected the votes of one fund when I checked. I voted with the Board’s recommendations 33% of the time. View Proxy Statement.

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

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United Natural Foods (UNFI): How I Voted – Proxy Score 42

Elizabeth Chang, December 13, 2015 ,

United Natural Foods, Inc. $UNFI, together with its subsidiaries, distributes and retails natural, organic, and specialty foods and non-food products in the United States and Canada. United Natural Foods is one of the stocks in my portfolio. Their annual meeting is on December 16, 2015. ProxyDemocracy.org had collected the votes of four funds when I checked. I voted with the Board’s recommendations 42% of the time. View Proxy Statement.

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

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Medtronic PLC: How I Voted – Proxy Score 44

Elizabeth Chang, December 7, 2015 ,

Medtronic PLC ($MDT) manufactures and sells device-based medical therapies worldwide. Medtronic is one of the stocks in my portfolio. Their annual meeting is on December 11, 2015. ProxyDemocracy.org had collected the votes of two funds when I checked. I voted with the Board’s recommendations 44% of the time. View Proxy Statement.

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

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WD-40 Company (WDFC): How I Voted – Proxy Score 100

Elizabeth Chang, December 4, 2015 ,

WDFC develops and sells maintenance products, and homecare and cleaning products. WDFC is one of the stocks in my portfolio. Their annual meeting is on December 8, 2015. ProxyDemocracy.org had collected the vote of one fund when I checked. I voted with the Board’s recommendations 100% of the time. View Proxy Statement.

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

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Guidewire Software, Inc. (GWRE): How I Voted – Proxy Score 40

Elizabeth Chang, November 30, 2015 ,

Guidewire Software, Inc. provides software products for property and casualty (P&C) insurers. It offers a technology platform supports core insurance operations, including underwriting and policy administration, claim management, and billing. Guidewire is one of the stocks in my portfolio. Their annual meeting is coming up on December 3, 2015. ProxyDemocracy.org had collected the votes of two funds when I checked. I voted with the Board’s recommendations 40% of the time. View Proxy Statement.

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

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Microsoft Corporation (MSFT): How I Voted – Proxy Score 62

Elizabeth Chang, November 28, 2015 ,

Microsoft Corporation (MFST), a technology company, develops, licenses, and supports software products, services, and devices worldwide. Microsoft is one of the stocks in my portfolio. Their annual meeting is on December 2, 2015. ProxyDemocracy.org had collected the votes of five funds when I checked. I voted with the Board’s recommendations 62% of the time. View Proxy Statement. iiWisdom provides a nice interactive viewing platform that makes Microsoft’s proxy a little easier to read. I recommend it.

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

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Procter & Gamble: How I Voted – Proxy Score 56

James McRitchie, October 6, 2015 ,

Procter & Gamble Co (NYSE:PG) provides consumer packaged goods and is one of the stocks in my portfolio. Their next annual meeting is October 13, 2015. ProxyDemocracy.org had collected the votes of four funds when I checked and voted. I voted with the Board’s recommendations 56% of the time. View Proxy Statement.

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

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The CEO Pay Problem

Kevin McManus, September 29, 2015 ,

Here in the first days of autumn, it seems that every day there is another article about the sorry extreme that executive compensation has become at so many companies. With the many tools now at the disposal of the proxy voter, one has to ask, how did we get here, and how do we fix it?

Of course, when asking the question of how did we get here, there is the standard answer, “greed,” but there has always been greed in corporate America, I don’t believe that the captains of industry at the beginning of the 20^th century where any less greedy at heart than those of today. Continue Reading →

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United Natural Foods (UNFI) – Proxy Score 82

James McRitchie, December 15, 2014 ,

United Natural Foods, Inc. (UNFI) , which distributes and retails natural, organic, and specialty foods, as well as non-food products primarily in the United States and Canada, is one of the stocks in my portfolio. Their annual meeting is coming up on 12/17/2014. ProxyDemocracy.org was down when I checked and voted on 12/14/2014. I hope they are able to obtain continued funding to keep the site going. If anyone would like to make a tax deductible contribution to that effort, please email Andy Eggers, cc James McRitchie (I’ll match whatever you contribute up to $2,500). I voted with management 82% of the time and assigned them a proxy score of 82.

View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the United Natural Foods 2014 proxy in order to enhance corporate governance and long-term value. Continue Reading →

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Guidewire Software (GWRE) – Proxy Score 33

James McRitchie, December 2, 2014 ,

Guidewire Software Inc ($GWRE), which provides software products for property and casualty insurers, is one of the stocks in my portfolio. Their annual meeting is coming up on 12/4/2014. ProxyDemocracy.org had collected the votes of two funds when I checked and voted on 12/1/2014. Sorry for the late post. Tomorrow is the last day to vote online. I voted with management 33% of the time and assigned them a proxy score of 33.

View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Guidewire Software 2014 proxy in order to enhance corporate governance and long-term value. Continue Reading →

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Microsoft Corporation (MSFT) – Proxy Score 62

James McRitchie, December 1, 2014 ,

Microsoft Corporation ($MSFT), which develops, licenses, markets, and supports software, services, and devices worldwide, is one of the stocks in my portfolio. Their annual meeting is coming up on 12/3/2014. ProxyDemocracy.org had collected the votes of six funds when I checked and voted on 11/30/2014. Sorry for the late post. Tomorrow is the last day to vote online. I voted with management 62% of the time and assigned them a proxy score of 62.

View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Microsoft 2014 proxy in order to enhance corporate governance and long-term value. Continue Reading →

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CEO Pay: Link to the Cost and Future Value of Capital

James McRitchie, November 26, 2014 ,

Total shareholder return (TSR), is the most frequent metric used to pay CEOs for performance. The authors of this excellent study from IRRCi believe CEO pay should, instead, be linked to the cost and future value of capital.

CEO Pay for ‘Performance”

In 1993, Congress amended the tax code to tie executive pay to “performance” metrics. To be a deductible business expense, pay had to be linked to performance. Stock price was an easy proxy for performance and the link was acceptable to the IRS. Before the amendment, in 1991, average CEO pay at large public firms was 140 times that of average employees. By 2003, it was approximately 500 times. Whereas equity-based compensation at such firms was zero percent in 1984, it climbed to 66% by 2001. The percentage of CEO pay from stock option grants rose from 35% in 1994, to 85% by 2001.

As the authors point out, “total shareholder return is, by far, the most dominant performance metric in long-term incentive plans.” Yet, increased TSR often has little to do with actually growing a business for the long-term. The rise of fall in stock price generally has little to do with CEO effort. When there is effort involved, rewards come quicker through cost-cutting (firing employees, reducing R&D), stock buybacks or financial engineering than by developing new products, training staff or increasing sales. Continue Reading →

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Cisco Systems – Proxy Vote Score 37

James McRitchie, November 19, 2014 ,

Cisco Systems, Inc. (NASD:CSCO), which designs, manufactures, and sells Internet Protocol (IP) based networking products and services related to the communications and information technology industry worldwide, is one of the stocks in my portfolio. Their annual meeting is coming up on 11/20/2014. ProxyDemocracy.org had collected the votes of four funds when I checked on 11/18/2014. Sorry for the late post. Today is the last day to vote online. I voted with management 37% of the time and assigned them a proxy score of 37. View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Cisco Systems 2014 proxy in order to enhance corporate governance and long-term value.

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Broadridge Financial Solutions, Inc. (BR): Proxy Score 80

James McRitchie, November 3, 2014 ,

Broadridge Financial Solutions, Inc. (BR), which provides investor communications and technology-driven solutions for the financial services industry, is one of the stocks in my portfolio. Their annual meeting is coming up on 11/13/2014. ProxyDemocracy.org had collected the votes of two funds when I checked on 11/3/2014. I voted with management 80% of the time and assigned them a proxy score of 80. View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Broadridge 2014 proxy in order to enhance corporate governance and long-term value. Continue Reading →

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H&R Block (HRB): Proxy Vote Score 54

James McRitchie, September 8, 2014 ,

H&R Block $HRB, which provides tax preparation and related services to the general public, is one of the stocks in my portfolio. Their next annual meeting is September 11, 2014. ProxyDemocracy.org had collected the votes of two funds when I checked and voted on 9/7/2014. I also checked the votes of OTPP and CalSTRS. All advance disclosers that I know of except CBIS voted in favor of all items. I voted with the Board’s recommendations 54% of the time and assigned them a proxy score of 54. View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the H&R Block proxy in order to enhance corporate governance and long-term value.

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Medtronic, Inc. (MDT): Proxy Vote Score 59

James McRitchie, August 18, 2014 ,

Medtronic $MDT, which manufactures and sells device-based medical therapies worldwide, is one of the stocks in my portfolio. Their next annual meeting is August 21, 2014. ProxyDemocracy.org had collected the votes of three funds when I checked and voted on 8/17/2014. I voted with the Board’s recommendations 59% of the time and assigned them a proxy score of 59. View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Medtronic proxy in order to enhance corporate governance and long-term value. Continue Reading →

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Premiere Global Services, PGI: Proxy Vote Score 40

James McRitchie, June 14, 2014 ,

Premiere Global Services, $PGI, is one of the stocks in my portfolio. Their annual meeting is June 17, 2014. ProxyDemocracy.org had collected the votes of three funds when I checked and voted on 6/11/2014. I voted with the board’s recommendations 40% of the time, thus assigned a proxy score of 40. View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the PGI proxy in order to enhance PGI’s corporate governance and long-term value. Continue Reading →

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