Published on May 9, 2014

Ford shareholders OK exec compensation despite pension opposition

By Barry B. Burr, Crain News Service

DETROIT (May 9, 2014) — Ford Motor Co. shareholders May 8 voted 75.2 percent of shares to ratify the compensation package of Alan Mulally, president and CEO, and other senior executives at the company despite opposition from CalSTRS, Canada Pension Plan Investment Board and Florida State Board of Administration (FSBA).

The voting level for the non-binding say-on-pay proposal was far below the average 92 percent in support at other companies calculated by Towers Watson through the end of April.

In addition, all nominees for directors were elected, even though the $183.3 billion California State Teachers’ Retirement System (CalSTRS), West Sacramento, and the $178.6 billion Tallahassee-based FSBA voted against the election to the board of Richard A. Gephardt, former House majority leader, and Jon M. Huntsman Jr., former candidate for the Republican presidential nomination.

In addition, CalSTRS voted against the election as directors of Anthony F. Earley Jr., Ellen R. Marram and John L. Thornton.

FSBA also voted against the election to the board of Edsel B. Ford II and James H. Hance Jr.

All are independent directors except for Mr. Ford, who is a consultant to the company.

The $185.4 billion (U.S.) Toronto-based CPPIB voted in favor of all nominees for director.

Shareholders approved by 93.6 percent a stock compensation plan for non-employee directors, despite the opposition by the three pension funds.

CalSTRS voted against the executive pay package because “there is a significant disconnect between pay and performance,” said Ricardo Duran, CalSTRS spokesman.

FSBA’s objection focused on “concerns with performance metrics and with the granting of discretionary awards in addition to regular incentive awards during the fiscal year,” Lucy Reams, FSBA senior corporate governance analyst, said in an e-mail.

CalSTRS opposed the stock plan for non-employee directors because it likes to see them paid with cash or straight stock but not options or restricted stock units, Mr. Duran said.

FSBA rejected the stock plan because of “its discretionary aspect and overall potential share dilution,” Ms. Reams said.

CalSTRS opposed Mr. Gephardt because he is overcommitted, serving on four other company boards, Mr. Duran said, adding CalSTRS policy is to allow a directorship at one other company. CalSTRS opposed the four other directors because they are members of the board’s compensation committee and approved both pay plans, Mr. Duran said.

FSBA voted against Mr. Ford “regarding his interest in an entity that received a significant fee from the company for marketing and related services in the fiscal year,” Ms. Reams said, while FSBA voted against the other directors “because they are employed full time and currently serve” on boards of more than three other public companies.”

A shareholder proposal calling for the company to adopt a one-share-one-vote stock structure was rejected by a vote of 65.6 percent against. The three pension funds supported the proposal. Class B stock, generally held by the Ford family, has 36.524 votes per share, or 40 percent of the total voting power of the outstanding shares, while Ford common stock has one vote per share, amounting to 60 percent of the total voting power.

CalSTRS holds 10.2 million Ford shares, valued at $162.6 million. FSBA holds 8 million Ford shares, valued at $126.6 million. The CPPIB holds 156,010 Ford shares, valued at US$2.4 million.

The pension funds’ votes are from their proxy-voting disclosures.

The voting results are all preliminary, according to a company statement, which didn’t provide vote tallies in the election of directors.

This report appeared on the website of Crain’s Pensions & Investments magazine, a Chicago-based sister publication of Tire Business.

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