The 2017 "Ficklefinger Award"
And the winner is.......
It’s been quite a few years since we handed out our once-annual Ficklefinger Award. With so much focus on good corporate governance practices over the past few years, most public companies are extremely wary of flicking a finger at shareholders, even inadvertently, and most have also become keenly aware of the inevitable consequence of doing so - where the finger turns itself around and fingers the flicker for bad behavior.
This year’s winner, Johnson Controls, is not only the earliest winner we’ve ever had, but sadly, it’s awarded to a company that had, before its merger with Tyco International last September, enjoyed a reputation as being one of the best - and best governed companies anywhere. In fact, its reputation for top quality products and for top-drawer treatment of shareholders, employees and other stakeholders prompted your editor to become a shareholder several years ago, which paid off handsomely for investors, we’d note.
So what in the world prompted the “new” Johnson Controls to take advantage of a loophole in SEC regs when there are mergers and disclose only one month’s worth of the compensation their CEO earned over the 12 month period covered by the 2017 proxy statement? And ouch! The one-day’s less than one month’s worth (Sept. 2 - Sept. 30) was a jaw-dropping $46.4 million, mostly due to merger related payouts, as a half-page WSJ story prominently noted.
“SEC rules do not call for the company to file additional information about Mr. Molinari’s compensation after the merger, which we did not,” a company spokesperson, Fraser Engerman, wrote in an email to the WSJ.
Then, in a second flick of the finger, the spokesman suggested that interested parties could figure it out for themselves - by going back to the 2015 numbers, then researching subsequent equity awards, and then making an estimate based on vesting and expiration dates - where, the Journal noted, the company does not provide values for them!
A flip of the bird to you, Engerman, and a big thumbs up to WSJ reporter Theo Francis, for fingering the facts for us. (P.S. We called our broker and sold the few shares of our Johnson Controls stock we’d kept after the Tyco merger emerged… the next business day.)