Don't be Lazy, Indifferent, etc. Vote your proxy

[LongHaul]

Ben Graham wrote in 1949 that “stockholders are lazy, indifferent, accustomed to obey the management, and suspicious of outside suggestions.”

 

My personal experience of watching CEO's engage in legal theft and then trying to convince large shareholders that they should vote against approving new stock options of the CEO's extravagant pay, completely agrees with Graham's point.  I have found the vast majority of institutional shareholders to be lazy, corrupt and cowardly.  It is completely pathetic.  In my opinion it is 100% shareholders fault for allowing crazy CEO compensation as they almost always vote for it and the board.

 

If I own shares in a company and think they CEO is overpaid (depends on the situation) I generally vote against the entire board and vote against the company's executive compensation.  I also vote against all excessive stock/option issuance. 

 

“Be the change that you wish to see in the world.”

― Mahatma Gandhi

 

 

 

 

 

[Guest longinvestor]

+1

Guilty as charged. But in the past. Concentration is my answer now. If a company doesn't earn my vote, don't get my money either. Love CEO's paying themselves salaries with same number of digits as my own salary! Not many around.

[benchmark]

+1

Guilty as charged. But in the past. Concentration is my answer now. If a company doesn't earn my vote, don't get my money either. Love CEO's paying themselves salaries with same number of digits as my own salary! Not many around.

 

I'd love some names of those companies :)

[Guest longinvestor]

+1

Guilty as charged. But in the past. Concentration is my answer now. If a company doesn't earn my vote, don't get my money either. Love CEO's paying themselves salaries with same number of digits as my own salary! Not many around.

 

I'd love some names of those companies :)

 

The two names this board is based on :)

[Jurgis]

I always vote the proxies. For most companies, I vote against the executive compensation and against the compensation committee of the board.

 

There are exceptions. BRK and FFH are obvious ones, but there are some more. FRMO. MKL is so so. Don't remember other names of the top of my head.

 

MSFT was exception when Bill Gates was CEO. No longer.

 

What do you guys do with great performers? E.g. Buffett said that he'd pay even more to Jamie Dimon at Berkshire implying that he earns every cent he gets. His compensation is still egregious. I vote against, but what you guys think?

 

If a company doesn't earn my vote, don't get my money either.

 

I was thinking about this, but this limits the number of investable companies too much for me. :)

[LongHaul]

Jamie Dimon - Looks like he was paid $27.7 million in 2014. 

JPM Net Income for 2014 to common ~$20 billion.

 

So it is about 14bps and it is pretax.  $27.7m is a lot of money in an absolute sense but it is a pittance for the value he provides overall.  If I owned JPM privately I would probably pay him that much if I thought he was truly earning it.

 

It is actually pretty amazing that Buffett and Munger have taken such low salaries for so long.  They are a true rarity.  I think this speaks volumes about their character.  They can take a lot more but they don't. 

As I recall in the 1800's, Commodore Vanderbilt also took nothing, as he didn't want to make money off his shareholders. 

 

 

[Jurgis]

Ah, but once you start talking about CEO salary as relative to company's net income, you can justify huge payouts like most of the Wall Street does. I don't think this is justified even for high performers like Dimon.

 

Honestly, nobody needs a salary of more than $1M a year (and I am being generous here). They might want it or might think they deserve it, but they don't really need it.

 

Of course, there are numerous people who are fine with paying jockeys multimillions in salary or hedgie fees. Though in reality indifference rules: institutions vote for status quo. I've seen some super egregious payouts voted down, but most are not. And it's rather funny to see $20M payout cut down to $10M after vote. "Oh noes, we did not think 10M mattered to anyone, what's the difference."