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Dell CEO Michael Dell may face some opposition when the company’s shareholders meeting Aug. 12.
Labor unions, upset about the company’s $100 million settlement with the Securities and Exchange Commission July 22 over accounting irregularities and Michael Dell’s pay over the past decade, sent an electronic letter to shareholders asking them to vote against keeping Dell as a director for the company.
In the Aug. 3 letter, the AFL-CIO and the American Federation of State, County and Municipal Employees said that not only is the settlement with the SEC not in the best interests of shareholders, but that Michael Dell’s compensation has not been in line with the company’s financial performance over the past decade.
For that reason, the labor unions are asking shareholders to withhold their vote for Michael Dell during the meeting in Round Rock, Texas, a move that would effectively remove him as a director.
How much weight such a request will carry remains to be seen. After the SEC settlement was announced, Sam Nunn, presiding director of Dell’s board, said in a statement that the agreement was in the best interests of the company as well as shareholders and customers.
In addition, Nunn also said that the board of directors “reaffirms its unanimous support for Michael Dell’s continued leadership, and the management team in its ongoing commitment to transparent accounting, integrity in financial reporting and strong corporate governance.”
The SEC accused Dell, the world’s third-largest PC vendor, of accounting fraud and other allegations in connection with millions of dollars it received from Intel over several years for not using products from Advanced Micro Devices. According to the SEC, an increasing percentage of Dell’s operating budget was from the Intel money, something that Dell executives did not disclose to investors. There also were concerns around Dell executives’ use of reserve money.
The company agreed to pay $100 million, and Michael Dell $4 million.
The AFL-CIO letter-citing a Wall Street Journal article-also stated that Michael Dell received $453.8 million in total compensation between 2000 and 2009, while during the same time the company’s stock lost about 66 percent of its value.
Dell spokespeople have said that most of Michael Dell’s compensation came from stock options granted in the 1990s and exercised between 2000 and 2005, and that the CEO hadn’t been given a bonus in four years, or stock options for six.