CalPERS and the AFSCME Employee Pension Plan intend to withhold votes for 10 of the 11 directors seeking election at Home Depot Inc.'s annual meeting on Thursday. The two funds plan to withhold the votes over issues of executive severance and excessive executive compensation.
Also, the $209 billion California Public Employees' Retirement System, Sacramento, and the $800 million AFSCME fund, Washington, both plan to vote in favor of an AFSCME-sponsored shareholder proposal calling on the Home Depot board to establish an annual shareholder advisory vote on the company's compensation report. The proposal "would give shareholders the right to an up-or-down vote on executive compensation," according to a statement from the staff pension fund of the American Federation of State, County and Municipal Employees.
CalPERS is actively soliciting shareholder votes for the proposal. "An advisory vote will allow shareowners to have a voice in the executive compensation practices of Home Depot while not directly affecting the board's ability to set compensation policy," Christianna Wood, CalPERS senior investment officer, global equity, wrote in a filing with the SEC. "Compensation programs are one of the most powerful tools available to a company to align key employee interests with the long-term interests of shareowners."
"Home Depot's directors are responsible for putting more than $150 million in Robert Nardelli's pocket over the past five years, despite languishing stock value," Gerald W. McEntee, AFSCME president, said in a statement.
The directors the funds are opposing are: Mr. Nardelli, chairman, president and CEO; Kenneth G. Langone, lead director; John L. Clendenin; Milledge A. Hart III; Gregory D. Brenneman; Claudio X. Gonzalez; Laban P. Jackson Jr.; Thomas J. Ridge; Bonnie G. Hill; and Lawrence R. Johnston.
ISS recommends withholding votes for the same 10 directors.
Among other proxy-voting advisory firms, Egan-Jones Proxy Services is recommending withholding votes for Messrs. Clendenin, Gonzalez and Langone; Glass Lewis is recommending its clients support all directors except Mr. Gonzalez; and Proxy Governance recommends supporting all directors except Ms. Hill.
Both ISS and Glass Lewis recommend voting in favor of the AFSMCE proposal, while both Egan-Jones and Proxy Governance recommend voting against it.