(WASHINGTON) – The country’s leading proxy voting advisor, ISS, recommends shareholders of Service Corporation International [NYSE: SCI] vote for an equity retention proposal sponsored by the International Brotherhood of Teamsters at the company’s annual meeting on May 13.
The proposal, ballot item #5 on the company’s proxy, calls on the board to adopt a policy that requires senior executives to retain a significant percentage of shares acquired through equity compensation programs until reaching normal retirement age or terminating employment with the company.
SCI’s 2015 proxy statement reports the CEO is required to hold 400,000 shares. In comparison, the proxy reports the CEO owns 1,252,145 shares with the right to acquire ownership under options exercisable within 60 days of 2,863,698 shares.
Requiring senior executives to only hold shares equal to a set target loses effectiveness over time. After satisfying these target holding requirements, senior executives are free to sell all the additional shares they receive in equity compensation.
In addition, ISS notes that only a third of SCI’s executives’ annual equity grants are tied to a longer-term performance goal which may not foster a strong focus on long-term performance.
“Our proposal seeks to better link executive compensation with long-term performance of the company,” said Ken Hall, General Secretary-Treasurer of the International Brotherhood of Teamsters. “Requiring a meaningful share retention ratio for shares received by senior executives from the company’s equity compensation plans will better align the interests of executives with the interests of shareholders and the company.”
Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women throughout the United States, Canada and Puerto Rico. Visit www.teamster.org for more information. Follow us on Twitter @Teamsters and “like” us on Facebook at www.facebook.com/teamsters.