Dell’s Tale of Two Proxies…

If Charles Dickens were writing about the proxy that Dell, Inc. (DELL) filed yesterday, he might have reworked his classic opening paragraph to read, “It was the best of proxies, it was the worst of proxies, it was the age of wisdom, it was the age of foolishness…” (we’ll spare you the rest so that we can get to the point).

We’ve written about Dell a lot over the years, driven by such actions as the company’s paying Michael Dell more than $4 million to compensate him for personal travel on his personal jet, or the company paying nearly $1 million in 2006 to provide Dell with personal and residential security. (That last number actually increased; in 2009, the company spent $1,164,625 on Dell’s personal security.)

So what did we find in this year’s proxy?

Here’s the section that earns true credit (although, admittedly, “the best of proxies” is an overstatement). The proxy states:

“In prior years, Dell provided personal, residential and business related security protection to Mr. Dell. Effective for Fiscal 2010, Dell will only provide Mr. Dell with business related security protection.”

That decision, which will save almost $1.2 million, may buoy investors’ spirits a bit after the gross margins in last week’s report disappointed analysts. In addition, Michael Dell didn’t take a bonus, stock awards, options, etc. in FY 2010, and his “Other” compensation (where perks are usually disclosed) was a paltry $13,623.

But there are examples of other expenditures that do not deserve praise. The company paid Dell almost $2.6 million so he could use his personal jet (although that’s an improvement from last year), and it’s hard to understand how Stephen Felice, president – consumer and small and medium business division, racked up “expatriate expenses” of $1,326,728 in one year. (Those aren’t a one-time expense, either. In 2009 Dell spent $707,094 on Felice’s expatriate expenses; in 2008, the number was $1,567,625.) And, of course, one can’t ignore that at the same time Dell’s money is flowing so freely on expenses for the NEOs, it acknowledged on May 26 that it’s cutting more jobs.

Finally, we can’t help but poke at one of the reasons Dell gives for opposing a proposal to give shareholders an advisory “say on pay.” At the top of p. 25, the proxy states:

“It is widely expected that, within the year, Congress will pass new legislation requiring such a non-binding vote on executive compensation. Management believes it is in the best interest of Dell and its stockholders to await the legislation and not create our own policy only to possibly have to change the policy to match the new legislation.”

Seriously? The company is afraid of having to tweak a policy? Perhaps we have more faith in Dell’s lawyers than the company’s board does, but we bet they’re up to the job. Like Dickens, all they have to do is pick up a pen and start writing.


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