Proxy voting season is winding up around here at Triad. We invest in individual securities for our clients and vote proxies on their behalf.
We have arranged for each company to send us their materials the old-fashioned way, via mail, so we can read both the proxy statement as well as the annual report.
The proxy illuminates the relationship between pay and performance, and helps us to identify “owner-operator” situations where an executive’s compensation and ownership aligns their interest with that of shareholders.
We have seen a wide range of compensation arrangements, starting with one where an executive’s annual compensation was higher than the value of his ownership stake. The other end of the scale is represented by a leading online retailer that we follow. The CEO owns about 17% of the company but takes home a salary under $100,000.
Our investment process seeks to identify these types of “owner-operators”. We do this because incentives matter and there is no stronger incentive for most executives than their compensation package.