Shareholder apathy can be as problematic as hostility

When companies adjourn a vote to try to get a quorum, as AMD has, it usually reflects poor handling of investor relations.

By MSN Money Partner Jun 21, 2013 3:16PM

QuartzSpecialist Peter Elkins is reflected in one of his screens at his post on the floor of the New York Stock Exchange (© Richard Drew/AP)By Theo Francis

 

Advanced Micro Devices (AMD) is in a frustrating pickle. The U.S. chipmaker wants to issue up to 16.5 million new shares so it can pay its executives in stock options and restricted shares. Shareholders have voted more than 85% in favor of the plan. And yet AMD can't go ahead. Or rather, it can -- with a hefty price tag. 


That's because the total votes cast on the proposal account for fewer than half of its outstanding shares, and under New York Stock Exchange rules, unless it can bump up the vote, the new stock wouldn't count as performance-related pay, and won't qualify for the attendant tax breaks.

 

As a result, AMD has postponed tallying votes on the proxy measure three times already, for a total of almost two months. It's not the only company kicking votes down the road. Last week we told you how silver producer Hecla Mining (HL) was able to turn defeat into victory in a shareholder referendum on pay by waiting an extra month for more votes to come in. 


Other companies that have postponed vote counts in the past year or so include American Capital Agency (AGNC), a real-estate investment trust with a market-capitalization of $10.1 billion, which has twice put off a final count in its bid to double the number of preferred shares it can issue; and Apollo Investment (AINV), a business development company worth about $1.8 billion, which last August put off a final vote on another measure for about a month before ultimately reporting victory by a 3-to-1 margin.

 

Adjourning meetings isn't common, but it also isn't new. Broc Romanek, a former corporate and federal regulatory lawyer who now edits the TheCorporateCounsel.net blog, calls annual-meeting adjournments, postponements and recesses one of "corporate law's great black holes." But when companies adjourn a vote to try to get a quorum, as AMD has, it usually means they did a poor job of getting shareholders to vote on the matter at all. That makes it more of a turnout problem than a sign of shareholder discontent.

 

Still, from a practical perspective, the result is the same as a vote against. Without enough shareholders voting, AMD won't be able to issue the stock it says it needs to attract and retain the best employees, or will have to pay a premium to do so -- even though shareholders like the idea. It has now given itself until July 14 to persuade more investors to cast their ballots.

 

Click here to sign up for the Quartz Daily Brief and start your day with the latest intelligence on the new global economy.

 

More from Quartz

MSN Money on Twitter and Facebook

Like us on Facebook: MSN Money and Top Stocks

Follow us on Twitter: @msn_money and @topstocksmsn


0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

118
118 rated 1
270
270 rated 2
472
472 rated 3
714
714 rated 4
624
624 rated 5
608
608 rated 6
623
623 rated 7
445
445 rated 8
319
319 rated 9
125
125 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
BIDUBAIDU Inc10
BMYBRISTOL-MYERS SQUIBB CO.10
CELGCELGENE CORP10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.