As We See It

by F.H. Byrd, for The Altman Group, January 8, 2010.

The Altman Interview – Donna Anderson, Vice President & Global Corporate Governance Analyst, T. Rowe Price Associates, Inc.

Question 1
F.H. Byrd: T. Rowe has always been very open to discussing proxy/voting issues with companies, something for which everyone is very appreciative.  Are there any particular governance issues you will be addressing in your proxy policy prior to the 2010 proxy season?

Donna Anderson: We have an open-door policy when it comes to speaking with issuers about their shareholder meetings, even during proxy season. We want to establish a dialogue with our portfolio companies on what we see as best practices in terms of governance, capital structure and executive compensation relative to the company’s peers.

In 2010, I think the most significant change in our proxy policy will be the way we look at equity compensation plans in the U.S. We have spent the past year drawing up a proprietary, scorecard-based way to look at stock plans and backtesting it to see how it would have altered our voting pattern in the past. Under the new framework, companies earn positive marks for incorporating certain shareholder-friendly provisions in their plans. Negative points are assigned for areas of potential concern such as an excessive (or rapidly increasing) burn rate, an overly dilutive plan relative to the company’s size and growth rate, or any problematic structural features in the plan…(continue reading)

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