The first USPX type proxy access proposal was submitted by Kenneth Steiner (with help from John Chevedden and other members of USPX), which went to MEMC Electronic Materials, Inc. (WFR) on 11/11/2011. Here’s the Whereas portion (the rest is the same as the standard USPX proposal).
WHEREAS, Most long-term shareowners have no reasonable means to make board nominations; this is a standard “proxy access” proposal, as described in https://proxyexchange.org/standard_003.pdf and according to independent research by GMI dated 11/3/2011, more than half of active board members hold no shares in our company. They awarded our CEO options worth over $14 million in 2009 without performance-contingent criteria. They superseded Compensation Committee guidelines in 2010 to award our CEO a discretionary payment. Our CEO’s 2011 annual awards will be 20%-based on a subjective analysis of personal metrics. The stock price plunged 63% in the year ending 11/9/2011.
A second proposal went to Textron, Inc (TXT) from Steiner on 11/15/2011 with the following whereas clause:
WHEREAS, Most long-term shareowners have no reasonable means to make board nominations; this is a standard “proxy access” proposal, as described in https://proxyexchange.org/standard_003.pdf. The Corporate Library gave our Company a “C” rating “due to ongoing concerns related to board composition and executive compensation.” Executive compensation is a particular concern, with cash-based long-term compensation that does “nothing to tie executive performance with long-term shareholder equity value.” A potential $39 million payout to our CEO “is not in the interest of company shareholders.” In their last elections, five out of 12 directors received a negative vote of at least 17%, two of them more than 30%. The stock price declined 11.8% in the year ending 11/15/2011.
I hope shareowners will give these proposals their full support. Personally, I don’t have an ownership stake in either company. However, at WFR I find it especially disturbing that more than half the board hasn’t invested any of their own money in the company. At both companies CEOs appear to have pay packages that are not in the best interests of shareowners. Pay at these levels should be clearly tied to performance and they are not.
I would also urge all shareowners to join the United States Proxy Exchange (USPX). Although we have members working for investment funds and reporters focused on the financial interests, we also have novices interested in becoming more actively involved as shareowners, instead of just being shareholders.
USPX is a grassroots movement run and funded entirely by individual investors for the benefit of individual investors. By simply joining our movement, you will make a difference. But don’t just join. Help us decide which companies should be targeted next. I can think of many companies that would be good targets. At this point, the greater need is for shareowners of companies with problematic governance willing to file.