Stanley Black & Decker became the sixth company to lose a vote on executive compensation this year, and the first to get less than 40 percent support from its shareholders (followed almost immediately by an even larger "no" vote at Umpqua Holdings Corporation). According to its 8-K, the pay plan received 51,265,057 votes in favor and 79,898,615 votes against.
More significantly, the shareholders also cast significant votes against the re-election of the company's directors. Two were re-elected with paper-thin margins, Carlos Cardoso (the only member of the compensation committee up for re-election this year) and Robert Coutts, who serves with Cardoso on the board's governance committee. Only one other member of that committee who was up for re-election, Manuel Fernandez, and more than 55 million shares were voted against him as well.
A pattern emerges
Stanley Black & Decker is like most of the other "nay on pay" companies in having higher than average institutional ownership (more than 82 percent) and a "no" recommendation from influential proxy advisory firm Institutional Shareholder Services. And the "no" votes on the directors may have been about more than concerns over compensation. Last year, as the two companies were merging, Stanley had to admit that one of its directors was not independent because of a private side business deal with CEO Nolan Archibald, now CEO of the combined company.
Unlike Umpqua and some of the others, Stanley Black & Decker has very strong performance numbers, which would normally earn it some leeway on compensation. But even good returns don't merit the goodies the board lavished on Archibald. According to a round-up on outrageous perks and pay packages by Gary Strauss of USA Today:
Black & Decker CEO Nolan Archibald received compensation worth $25.8 million in 2010. As chairman of the newly merged Stanley Black & Decker, he'll get $43.3 million in 2011 and a bonus of up to $45 million in 2013. His 2010 perks were valued at more than $600,000, including $526,391 for personal travel on the company jet, $39,676 for financial planning, $25,722 for cars, $4,528 for sports and entertainment tickets, $1,820 for club dues, and Black & Decker products valued at $2,685.As Theo Francis points out on the indispensable Footnoted blog, the Stanley Black & Decker proxy says:
As a general rule, the Company does not believe it is necessary for the attraction or retention of executive talent to provide our executives with a substantial amount of compensation in the form of perquisites.Yet this is unquestionably substantial, with more than half a million dollars for his non-business use of the corporate jet. And he gets more than $100 million over three years but can't pay for his country club or his own company's products?
This is more than a failure on compensation; it is a failure of communication -- to the shareholders and to the executives. If this board doesn't make some significant changes to its own composition and committee assignments as well as to the pay and perquisites awarded to Archibald, it can expect to set another record for shareholder disapproval next year.