New York City Comptroller William C. Thompson Jr., today called on the shareholders of PMC-Sierra Incorporated and the Ryland Group Incorporated to vote in favor of executive compensation shareholder resolutions submitted by the New York City Pension Funds at their annual meetings tomorrow.

“The New York City Pension Funds have established themselves as leaders in advancing pay for performance as a means of building long-term sustainable business and investment value,” Thompson said. “It’s in the interests of investors to promote the adoption of compensation policies that link executive compensation to superior performance.”

“In addition, companies must begin to incorporate measures of sustainability into executive compensation packages, and include such performance and metrics in their compensation disclosure and analysis.  Tomorrow, our fellow shareholders can send a clear message to the Boards of these companies by voting in support of the Funds’ proposals.”  

The Ryland Group, along with the Home Depot, Rite Aid, KB Home, Applied Microcircuits, and Charming Shoppes, received resolutions this year calling for an “Advisory Vote on Executive Compensation” (Say on Pay) to contain excessive compensation and create more accountability on their board compensation committees. 

The results of these non-binding votes also provide Board of Directors with useful information about shareholder views on companies’ senior executive compensation practices.

Shareholders are expected to vote on the resolution at the Ryland Group’s Annual Shareholder meeting on Wednesday April 29th at the Ritz-Carlton 4375 Admiralty Way, Marina del Rey, California, beginning at 8 AM local time.  The New York City Pension Funds collectively hold 106,534 shares in the Ryland Group.

Earlier this year, Thompson announced the withdrawal of the resolution to Charming Shoppes after the company notified the Funds of its commitment to adopt the “Say on Pay” resolution beginning in 2010.

At a recent shareholder meeting of KB Homes on April 2nd, the Funds’ resolution received 51.8% of the vote, demonstrating strong support among other shareholders.

This is the third time this measure has been filed with Home Depot. In 2007 and 2008, the New York City Pension Funds filed “Say on Pay” proposals with the company, garnering 43% and 42.1% support, respectively.  Shareholders are expected to meet and vote in May on the resolution.

The remaining companies have yet to vote on the resolution and will do so in the coming weeks and months.

PMC-Sierra Incorporated has received a resolution for “Performance-Based Stock Options” from the Pension Funds, requesting that the Board of Directors at PMC Sierra Incorporated adopt a policy requiring that stock options, granted to senior executives as part of their compensation packages, be performance-based.

This resolution is being re-filed by the Pension Funds.  In 2008, it garnered 38.8% of the shareholder vote. A new vote will take place at the annual meeting on Wednesday, April 29th at the Hilton Santa Clara, 4949 Great American Parkway, Santa Clara, California at 9 AM local time.  The New York City Pension Funds collectively hold 677,881 shares in PMC-Sierra Incorporated.

“Performance-based options, options tied to business performance goals or exceeding peers’ performance, better serve to align the interests of executives and stockholders.” Thompson said.  “I encourage all my fellow shareholders to build on last year’s progress by voting to approve this important resolution.”

In addition, Comptroller Thompson has submitted “Pay-for-Superior Performance” resolutions on behalf of the Pension Funds to Tenet Healthcare Corporation, and Pier 1 Imports this year.  

Pay-for-Superior Performance proposals request that companies’ executive compensation committees establish superior standards in their compensation plans for senior executives by incorporating guidelines such as:

• An incentive bonus should use financial performance criteria that can be benchmarked against a disclosed group of peer companies.  An annual bonus is only awarded when the company’s performance exceeds the median or mean performance of its peers.
• Long-term compensation should use criteria that can be disclosed against a peer group of companies. 
• Compensation plan disclosure should be sufficient to allow shareholders to determine and monitor pay and performance correlation.

Tenet Healthcare and Pier 1 Imports have received Pay-for-Superior Performance resolutions from the New York City Pension Funds in the past. 

Vote results are as follows:

• Tenet Healthcare – 15.72% in 2008
• Pier 1 Imports - 46.8% in 2008, 25.6% in 2007

Pier 1 recently challenged the Funds’ proposal with the SEC, but was overruled.  No shareholder meeting date has been announced. 

Shareholders will vote on the resolution at the Tenet Healthcare Annual Meeting in May.

“Shareholders deserve to have their voices heard regarding the compensation paid out to corporate executives,” Thompson said.  “I strongly recommend that the shareholders vote to support these resolutions and to help ensure that these companies agree to a more transparent and accountable process of compensation.”

In addition to Thompson, Trustees for the five New York City Pension Funds (chairs in bold) are as follows: 

New York City Employees’ Retirement System: New York City Finance Commissioner Martha E. Stark (Chair); New York City Public Advocate Betsy Gotbaum; Borough Presidents Scott Stringer (Manhattan), Helen Marshall (Queens), Marty Markowitz (Brooklyn), James Molinaro (Staten Island), and Acting Borough President Earl D. Brown (Bronx); Lillian Roberts, Executive Director, District Council 37, AFSCME; Roger Toussaint, President Transport Workers Union Local 100; and, Gregory Floyd, President, International Brotherhood of Teamsters, Local 237.

Teachers’ Retirement System: New York City Finance Commissioner Martha E. Stark (Chair); Deputy Chancellor Kathleen Grimm, New York City Department of Education; mayoral appointee Tino Hernandez; and, Sandra March, Melvyn Aaronson and Mona Romain, all of the United Federation of Teachers.

New York City Police Pension Fund: Mayor Michael Bloomberg; New York City Finance Commissioner Martha E. Stark; New York City Police Commissioner Raymond Kelly (Chair); Patrick Lynch, Patrolmen’s Benevolent Association; Michael Palladino, Detectives Endowment Association; Edward D. Mullins, Sergeants Benevolent Association; Thomas Sullivan, Lieutenants Benevolent Association; and, Roy T. Richter, Captains Endowment Association.

New York City Fire Department Pension Fund: Mayor Michael Bloomberg; New York City Fire Commissioner Nicholas Scoppetta (Chair); New York City Finance Commissioner Martha E. Stark; Stephen Cassidy, President, James Slevin, Vice President, Robert Straub, Treasurer, and John Kelly, Brooklyn Representative and Chair, Uniformed Firefighters Association of Greater New York; John Dunne, Captains’ Rep.; John J. McDonnell , Chiefs’ Rep., and James J. McGowan, Lieutenants’ Rep., Uniformed Fire Officers Association; and, Joseph Gagliardi, Marine Engineers Association.

Board of Education Retirement System: mayoral appointees Schools Chancellor Joel Klein (Designee, Kathleen Grimm, serves as co-chair), Alan Aviles, Philip Berry, David Chang, Tino Hernandez, Edison O. Jackson, Richard Menschel and Marita Regan; Patrick Sullivan (Manhattan), Wendy Gilgeous (Brooklyn), Joan Correale (Staten Island); and Dmytro Fedkowskyj (Queens); Anna Santos (Bronx);  and employee members Joseph D'Amico of the IUOE Local 891 and Milagros Rodriguez of District Council 37, Local 372 (serves as co-chair).

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