|
Proxy Voting: Glass Lewis & Co.
(April 29, 2004)
Glass
Lewis & Co., a proxy adviser to institutional investors, has granted
permission for the Forum's use of the explanatory sections of its April 29, 2004
"Proxy Paper" report for the Crowley
Maritime Corporation annual meeting, copied below, recommending that the firm's
clients
-
withhold votes for the reelection of four of the
eight incumbent directors based on "serious
concerns about the objectivity and independence of the board and its ability
to perform its proper oversight role," and
-
vote against management's proposed "2004
Management Incentive Plan" for executive bonuses because it "does not provide
sufficient information for shareholders to make a reasonable judgment as to
its potential total cost."
|
|
| |
|
Sarah
Nebel, Lead Analyst
snebel@glasslewis.com
Published:
April 29, 2004
|
|
|
Crowley
Maritime Corp.
OTC: CWLM
Industry: Diversified Transportation Services
Meeting Date: May 20, 2004
Record Date: April 9, 2004 |
|
| |
|
♦♦♦
PROPOSAL 1.00: ELECTION OF DIRECTORS - SPLIT
♦♦♦
[Pages 3-4]
The board has nominated eight candidates to serve a
one-year term each. If elected, their terms would expire at the
Company's 2005 annual meeting of shareholders.
We note that five of the eight directors are either
affiliated with the Company or are insiders. This raises serious
concerns about the objectivity and independence of the board and its
ability to perform its proper oversight role. We prefer boards with a
significantly lower percentage of affiliates and insiders.
We recommend withholding votes from the following
nominees up for election this year based on the following issues:
Nominee BOWLES is a nephew of Molly Crowley
and the first cousin of Thomas Crowley, the chairman, president and CEO
of the Company. Mr. Bowles is also a member of the audit committee and
the compensation committee, both of which we believe should consist
solely of independent directors. In addition to this conflict of
interest, due to the lack of a two-thirds independent board, we
recommend withholding votes from this nominee based on his status as an
affiliate.
Nominee CROWLEY, JR. is the chairman,
president and CEO of the Company, and son of Molly Crowley and first
cousin of Philip Bowles. Mr. Crowley is also the beneficial owner of
64.7% of the Company's common stock and 99.9% of the Company's series A
preferred stock. Mr. Crowley is a member of the audit committee and the
compensation committee, both of which we believe should consist solely
of independent directors. In addition to this conflict of interest, due
to the lack of a two-thirds independent board, we recommend withholding
votes from this nominee based on his status as an affiliate.
We further recommend withholding votes from Mr.
Crowley because of his failure to appoint a lead or presiding director.
The Company's CEO is also the chairman of the board and the board does
not have an independent lead or presiding director. When the positions
of the CEO and chairman of the board are not separated and there is no
nominating committee, we believe that it is the responsibility of the
chairman to appoint an independent lead or presiding director to ensure
proper oversight. We view either an independent chairman or an
independent lead or presiding director as better able to oversee the
executives of the Company and set a pro-shareholder agenda without the
management conflicts that a CEO or other executive insider often faces.
This, in turn, leads to a more proactive and effective board of
directors.
Nominee DEPOLO serves as the chairman of the
audit committee. The audit committee did not put the selection of the
auditor up for shareholder ratification at the 2004 annual meeting, an
omission which we believe constitutes a failure to fulfill the
committee's duty to shareholders. Given that audit fees are reasonable
in proportion to non-audit fees, we recommend withholding only from the
chair of the audit committee this year. We encourage the entire
committee to allow shareholders to ratify its selection of the auditor
going forward.
Nominee WOLFE is a partner of a Orrick,
Herrington & Sutcliffe LLP, which provides legal services to the
Company. We question the need for the Company to engage in business
relationships with its directors. We view such relationships as creating
conflicts for directors, as they may be forced to weigh their own
interests in relation to shareholder interests when making board
decisions. In addition, a company's decisions and choices regarding
where to turn for the best professional services may be compromised when
doing business with the professional services firm of one of the
company's directors. In addition to this conflict of interest, due to
the lack of a two-thirds independent board, we recommend withholding
votes from this nominee based on his status as an affiliate.
As to all other nominees, we conclude that they bring
an appropriate level of experience and diversity of expertise to this
board. We find no affiliate transactions that we believe are likely to
bias any of the other nominees.
Accordingly, we recommend that shareholders vote:
WITHHOLD: Bowles; Crowley, Jr.; Depolo; Wolfe
FOR: All other nominees
♦♦♦
PROPOSAL 2.00: 2004 MANAGEMENT INCENTIVE PLAN -
AGAINST
♦♦♦
[Page 5]
Analysis of the Proposed Plan:
This proposal seeks shareholder approval of the 2004
Management Incentive Plan, which grants key employees of the Company
cash bonus incentives and awards under the deferred compensation plan
based on their performance. Like other plans adopted to satisfy the
criteria set forth in Section 162(m) of the Internal Revenue Code, if
this proposal is approved by the shareholders, the Company will be able
to deduct compensation in excess of $1 million for the CEO and the next
four most highly compensated officers.
Glass Lewis recognizes the value of executive
incentive programs and the tax benefit of shareholder-approved incentive
plans. In order to allow for meaningful shareholder review, we believe
that these proposals should generally include the following criteria:
specific performance goals, a maximum award pool, and a maximum award
amount per employee. We also analyze the estimated grants and the
Company's past compensation practices to see if they are reasonable and
in line with the Company's peers.
We find that the proposed plan does not satisfy all
of the criteria described above. It does include specific performance
goals and an annual maximum for individual awards, but fails to set a
maximum annual award pool or provide the number of eligible employees
from which a total pool could be derived. The plan does not provide
sufficient information for shareholders to make a reasonable judgment as
to its potential total cost.
Accordingly, we recommend that shareholders vote
AGAINST this proposal.
|
|
DISCLOSURE
This proxy
analysis is confidential and may not be reproduced in any manner without
the written permission of Glass, Lewis & Co. This analysis is not
intended to solicit votes and has not been submitted to the Securities
and Exchange Commission for approval. No warranty is made as to the
completeness, accuracy or utility of this analysis and investors should
not rely on it for investment or other purposes. |
|
|