Conagra (CAG) 2007 Shareholder Meeting – How I Vote My Proxy

On my way back from the Berkshire Hathaway shareholder meeting, I stopped at the Chef Boy Ardee plant in Milton, PA which is owned by Conagra (CAG – $25.66). I bought Conagra as a value play a couple years ago.  The stock has not moved much in that time.  I collected a nice fat dividend early on that went down.  Needless to say, this pick is not one of my best.  I continue to hold Conagra.  And now I'm voting my proxy. The main issues: executive compensation and treatment of chickens.
Chef Boy Ardee in Milton, PA and David NeubertI got my electronic proxy statement today from Conagra Foods (CAG).  There are very few items to vote on.  But here's how they flesh out:

Staggered Board-
When I first looked at the proxy I only saw six directors up for election, which is always a sign that a company has a staggered board (shareholders can only fire a small portion of directors in any given year, which means weak management can keep their jobs).  Whenever I see a staggered board, I automatically vote against ALL directors.  However, this is not the case with Conagra, they are in the process of phasing out their staggered board.  So I will still vote for the board.

Executive Compensation-
I check the compensation of the executives (usually starting with the CEO).  Most companies in the S&P500 overpay their CEOs.  If this company is one of them, I'll vote against every director on the compensation committee. 
My determination for Conagra:
Gary Rodkin, the CEO and President, has 500,000 options from the long term compensation plan and will receive another 300,000 options for the 2007-2009 period.  He's also getting $14 million in compensation for this past year.  Rodkin also has an $18 million golden parachute.  I'm a shareholder and my dividend didn't go up, why should this guy get paid so much?  Did he start the company?  No. He's an employee. So he's clearly overpaid.  Let's give him a big cash or share bonus (not options) in the year the company turns around. 

Conagra does have a few shareholder-friendly aspects of its executive compensation, however. I do like that executives are required to target an amount of share ownership that is a multiple of their salary. But in Conagra's case, the bad compensation decisions outweigh the positive ones. I'm voting against the only member of the compensation committee on the ballot, Steven S. Goldstein.

Approval of Auditor:
Fees $8 million.  Yeah, it's expensive to be a public company. I voted FOR.

Shareholder Proposals:
There is only one shareholder proposal this year at Conagra.  The proposal comes from PETA and involves the way in which poultry supplied to Conagra is killed, which PETA claims is pretty horriffic.  If approved, the proposal would require that Conagra only buy poultry from suppliers who kill poultry in a humane way.  The Conagra Board opposes this proposal, but then says that they are doing this anyway and working with suppliers on it.  If that is the case, I'll vote for the proposal anyway, just to make sure management (or perhaps future management) follows through. I voted FOR.

Disclosure:  I own Conagra (CAG). Unless the dividend goes up, I would sell a portion of my holdings if the stock rises to $27.  I used to be a vegetarian but I am not now, however I still don't eat chicken.  Something about the way those animals are raised really freaks me out. 

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