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14 August 2010
SRI-Adviser: Dell Shareowners Vote Down AFL-CIO Resolutions on Executive Pay and Chairman
Source:
www.sri-adviser.com
by Robert Kropp
Despite SEC allegations of improper disclosure of payments, shareowners vote with management on governance resolutions.
On Thursday, Dell, the computer company, finally completed its annual general meeting, orignailly scheduled for July 16. Shareowners rejected a proposal submitted by the AFL-CIO, that called for an advisory vote on executive compensation.
A second proposal submitted by the labor union federation, calling for the withholding of votes for Chairman from CEO Michael Dell, was also defeated, despite support for the proposal from Institutional Shareholder Services (ISS).
The July 16 annual meeting was adjourned by the company to allow shareowners time to evaluate allegations by the Securities and Exchange Commission (SEC) that Dell "did not disclose to investors large exclusivity payments the company received from Intel," and engaged in fraudulent accounting to make it appear that it "was consistently meeting Wall Street earnings targets and reducing its operating expenses."
To settle the SEC allegations, Dell agreed to pay a $100 million penalty. Michael Dell and former CEO Kevin Rollins paid $4 million penalties, and former CFO James Schneider paid $3 million. Neither the company nor Michael Dell admitted wrongdoing, although the company did agree to improve its disclosures.
In a letter to Dell shareowners, the AFL-CIO stated that during the time period covered by the SEC's allegations, Michael Dell sold more than 68 million shares for more than $2 billion.
The letter quotes the recommendation by ISS to withhold votes for Chairman, which stated, "Mr. Dell should be held accountable for the lack of oversight at company's accounting practices, and for his role in disclosure violations."
The ISS recommendation continued, "It is imperative to separate the role of chairman and CEO such that it could possibly lead to a better system of checks and balances."
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