As I prepare for the meeting tomorrow, I just happened upon the notice of annual meeting from May 24, 2000 which I compare with this year's notice. Would you believe that Christiansen received total compensation of $560, 590, and 537 in years 98, 99 and 00? Moquist received $583, 643 and 528 for years 08, 09 and 10. Back in 98-00 Moquist was executive VP and got total compensation of $241, 267 and 205 in the successive years. So his pay has about doubled over the 10 years but is still no more than David Christiensen's at the end of his career. And he was made Pres. CEO.
Meanwhile Iacarella in his first full year of 2000 received $138K and in the most recent 3 years got $315, 356, and 315. So his pay did not quite triple over the 10 years.
We might also consider Dan Rykhus who was compensated at $375, 387 and 357 for the last 3 years. That would be about 60% more than Moquist received 10 years earlier.
It looks to me like Moquist refused to take more than he felt was reasonable unless I made a mistake. They did not add up the numbers in the first 3 years so I just estimated them. And I have always felt that any CEO who accepts pay over 100 times that of a floor worker is overpaid. About the only exception I might consider to that rule would be Ron Moquist
Well said, Skip. And in those 10 years Ron led the company to a 1300% stock gain vs. -8% on the S & P. Hell of a leader and manager, very, very rare that you find those mgt. traits in the same individual!!
I'm glad I've had the opportunity to learn from this message board. It has been good to have useful discussions about the holding itself and its segments.
It has also been good to occasionally be challenged by Skunky which has helped me better understand some of my beliefs and philosophies regarding the market.
As for me, I'm glad to associate with both of you(g); the best spelled and punctuated discussion ever on Yahoo.
I meant emphasize rather than empathize, but I'm sure you both corrected my mistake in your heads. Thanks, L
It seems that you may have possibly disregarded some of what I wrote.
If I remember correctly one of my points was that special dividends at least proportionally distribute company assets to the holdings owners.
If I was mistaken about my interpretation about a minority receiving undue benefit at the expense of the majority I must have misunderstood that part stating:
"So you have 80-85% of the ownership not giving a flying fig about incremental changes in tax code, 5-10% small investors worrying about whether their net liability will be $100 or $110, and 10-15% of the very well-connected large holders.
A special dividend does nothing but appease that last group of squeaky wheels at the detriment of the other 85% of the company. "
If I remember correctly in High School economics it is taught that the government uses taxes to encourage and discourage particular behaviors. So I still fail to see how management should be ashamed if tax laws affect their decision making processes. Tax laws can be peculiar things. It may be illogical on the surface, but a turn of a calendar page can make a world of difference in the outcome of an event.
Your blue car analogy would make sense in this discussion if it applied to the tendencies at hand.
Management tends to issue special dividends if funds accumulate in the treasury and they are unable to find appropriate ways to use the funds to grow the company. To my knowledge that is the current situation. If that was not the current situation we would be justified to question the actions of management.
As for jumping off a bridge... it is proper to evaluate whether or not a course of action is appropriate for you and your interests.
I am currently inclined to believe that the holdings I cited that are making those decisions are quite possibly making decisions that have now become rational because of alterations in laws. Sometimes it is appropriate to do what other people are doing. There may be a reason they are engaging in that course of action. Though it would certainly be prudent to investigate why the change in behavior is occurring.
If there is sufficient funds to issue a special dividend, maintain emergency funds in the treasury, a lack of ventures for the holding to invest funds in to grow the company, a history of issuing special dividends in such cases, and tax changes on the horizon... I would prefer to receive the special dividend before the changing of the years would result in me losing more of my special dividend to the tax man than needed to be lost.
Thank you for the clarification on tax efficiency and helping me refine my goals for investing.
We'd have a better chance of meaningful discussion if you actually read what I'd written.
__As far as I could tell your argument was "Also, you should be ashamed to admit in public that you'd let potential changes to tax law drive your decision to forego _productive_ capital reinvestment in favor of slipping an extra buck or two into the pockets of your major shareholders", your supporting evidence was your belief that a majority of ownership would not care about an incremental change in the tax code,__
Correct up to here.
__and that your belief that the special dividend would benefit a minority at the expense of the majority.__
No. What I said was that a tweak to the tax code should not be allowed to drive the decision-making process.
Imagine you and your spouse were out shopping for a new car. Your spouse told you that you should buy the first blue one that someone were to show you. You might like blue, and the car you eventually purchased might indeed be blue, but what would think of the decision-making?
__As far as I can tell Raven has had a tendency to return excess funds to share holders when management has been unable to find ways to put those funds to use in growing the company. __
That is the proper philosophy.
__If a special dividend and tax increases are on the horizon I would like to think rational people would prefer to receive the dividend when it would be taxed at a lower rate. __
The problem here is that you're focusing on the "when" and not the "if". If a distribution is not appropriate, the timing will not suddenly make it OK.
__In addition to that I believe political changes have been affecting the decision making process at other companies.__
My mother used to ask me, "if all of your friends were to jump off a bridge..."
__I am intrigued by your comment about about efficiency being created by 100% capital loss. __
I was being a little flippant, but yes, if your sole goal is to minimize your tax liability, then the best thing you can do is lose money hand over fist.
__What would you propose be done with the funds accumulating in the treasury?__
As I previously stated, that is a worthy debate for ANY company. Note my use of _productive_ above. That is the key. While there are productive reinvestments to be made, they should be made. When management finds itself tempted to make unproductive use of its capital, the shareholders should demand it's return. Simple as that.
You'll note that the above does not make reference to possible changes to personal tax rates.
Sometimes the green car really is the right one for you.
As far as I could tell your argument was "Also, you should be ashamed to admit in public that you'd let potential changes to tax law drive your decision to forego _productive_ capital reinvestment in favor of slipping an extra buck or two into the pockets of your major shareholders", your supporting evidence was your belief that a majority of ownership would not care about an incremental change in the tax code, and that your belief that the special dividend would benefit a minority at the expense of the majority.
As far as I can tell Raven has had a tendency to return excess funds to share holders when management has been unable to find ways to put those funds to use in growing the company. If a special dividend and tax increases are on the horizon I would like to think rational people would prefer to receive the dividend when it would be taxed at a lower rate.
In addition to that I believe political changes have been affecting the decision making process at other companies. If I am interpreting news releases correctly at the very least Verizon, AT&T, Caterpillar, and Valero have indicated they will be absorbing costs as a result of transferring responsibility for health care benefits they to the governement because of changes to the tax code brought about with the passage of the health care legislation.
I am intrigued by your comment about about efficiency being created by 100% capital loss. I was under the impression that the government is only willing to have minimal downside with stocks each year with a 3000 or so deduction from your other income and if your losses exceed that you can continue to whittle away at it in the future.
I guess the efficiency to look for is growth of the purchasing power of your assets after taxes, commissions, other costs, and inflation are taken into account.
The special dividend would at least be paid out proportionally and because of that I fail to see how it would benefit any particular group of owners more than other owners.
What would you propose be done with the funds accumulating in the treasury?
_As for feeling shame about tax laws affecting decisions to put money into the pockets of share holders... Do you let tax laws affect your investing decisions, and if so do you feel shame? On my side I find bonds to be unappealing partially because of current tax laws.
At least as far as that one goes those dividend dollars get spread out proportionally. There are far worse things that could be done with those dollars. _
Come on now, Skip. You're a clear enough thinker to handle the argument I laid out. You don't need to try to exchange it for one you're more comfortable with.
For the record... Yes, all things being equal, I prefer tax-effciency over tax inefficiency and am not ashamed to admit it.
However, letting tax efficiency dominate your investment rationale is just plain silly. Do I need to point out that the MOST tax efficient investment is one that presents you with 100% capital losses?
Raven paid a consistent dividend long before I took a position. My decisions regarding how I hold it have already been made, and an incremental change in the tax code will not push me into whole-scale adjustment.
However, if I had a choice between $1/shr special dividend or $1/shr intrinsic value, I'd take the latter every time.
What to do with retained earnings is a worthy debate for any company. There are certainly times when a dividend is appropriate, and certain times when reinvestment is appropriate. The point is that an incremental change to PERSONAL tax rates should not drive the decision.
I was surprised to hear what Brazil can get away with under free trade, although I know China gets away with a lot.
Skip, your experience is better than mine with opening transactions. I have been told by brokers not all bids/offers are posted at 9:30, which makes no sense to me.
Having followed and owned the stock for 17 years, I have always felt that the company management did as good a job of managing for profit as any company I invested in. Very rarely at the annual meetings has the topic of taxes ever surfaced.
Skip, the numbers we discussed as prices over the years were incorrect since the schedule I had looked at were post split numbers. I recognized my error when I returned Tues. evening,
I appreciate your comments about the meeting, You take good notes!