Democracy (not) at work at ZipRealty

Over the past few days, several people have pinged me about this amended filing made by ZipRealty. Now, in general, we don’t tend to pay much attention to stocks this small, simply because we need to draw the line somewhere. But a few things prompted us to take a closer look. For one, it was a “Monday Morning Dump” meaning that it was filed after the SEC’s 5:30 pm est cut-off. While companies can technically send stuff to Edgar after the deadline, it doesn’t become publicly available until 6 am est on Monday.

The other reason we took a look was due to some of the comments we received. One tipster used the words “tortured logic” to describe the filing. Another said it was “destined for the hall of shame”. And though we hate to admit to it, sometimes, just like everyone else, we actually look at accidents on the side of the road.

In a nutshell, ZipRealty held its annual meeting back on May 30. By a slim margin, shareholders voted to approve executive compensation every year, the so-called “Say on Pay” issue. The actual count was 6.68 million in favor of an annual vote and 6.27 million in favor of a vote once every three years. Now here comes the good part:

The Board noted the tightness of the results: Of the shares entitled to vote on this proposal, only a bare majority – less than 51% – were voted in favor of a frequency of one year, and 48% were voted in favor of the frequency of three years preferred by the Board. The Board also noted that 28% of the shares present were not entitled to vote because they were broker non-votes and, had they been entitled to vote, those votes could have changed the results in such a tight contest…While the Board believes that the views of the Company’s stockholders are important, given the close split between the frequencies of three years and one year, and the stockholders’ overwhelming support for the Company’s executive compensation program, the Board has determined to follow its strong preference to include a stockholder advisory vote on executive compensation in its proxy materials every three years.”

Can you imagine if all elections worked this way?


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