Firm urges GTAT shareholders to vote 'no' on exec compensation

The budding movement by shareholders to question the pay of executives at publicly held companies has reached New Hampshire

The budding movement by shareholders to question the pay of executives at publicly held companies has reached New Hampshire, as GT Advanced Technologies on Wednesday morning tries to fend off a proxy challenge to its executives' compensation.

Nashua-based GTAT last week replied to an Aug. 9 recommendation by Institutional Shareholders Services, a proxy advisory firm, which urged its clients to vote against the compensation in an advisory vote at the company's annual meeting on Wednesday.

This is the first full annual meeting season that shareholders have gotten to have a "say on pay" under Securities and Exchange Commission rules adopted last year.

In some of the votes already held, shareholders have actually voted against executive pay packages. The most notable was an April rebuke of a $15 million pay package to Citigroup CEO Vikram Pandit by shareholders dissatisfied with the company's results.

In July, GTAT revealed that it paid its top 5 executives some $16.8 million in cash equity and benefits for its 2012 fiscal year, which ended on March 31 — a 15 percent increase over the previous year.

GTAT CEO Thomas Gutierrez led the way with an executive compensation package of nearly $6.4 million, with about $4.5 million in stock awards and a $1.1 cash bonus and incentives on top of his $719,000 salary. That's about $1.63 million (or about 34 percent) more than fiscal 2011.

GTAT reported an annual profit to $183 million in fiscal 2012, topping the $175 million it earned the previous year. It posted $996 million in revenues, almost $100 million above the previous year.

For its part, ISS said of GTAT that it had "high concern with respect to the alignment of CEO pay and company performance at this time.

"ISS attributed the company's "exceptional" increase in profits and revenue to acquisitions and said GTAT's CEO base salary and discretionary bonus was a cause for concern. It also said that total shareholder returns underperformed.

In particular, ISS complained that Gutierrez's base salary has increased some 47.8 percent since fiscal 2010.

But in its rebuttal, GTAT argued that its acquisition of Crystal Systems in 2010 expanded the company's product offerings beyond solar technology and into LED technology, and it has still not come close to generating as much revenue for the company as its solar business.

As for the CEO's base salary, it was increased in 2011 based on that year's performance — which, according to ISS, was way above the industry average.

In terms of bonuses, GTAT said, they were 84.7 percent of target, whereas incentive operating income performances were 90.2 percent, despite a challenging market. Again, the company's performances was particularly better than its competitors in both the solar and the LED industry, GTAT said.

Shareholders will get to give their opinion on the matter Wednesday morning at 8 at the Langham Hotel on Franklin Street in Boston.