For a large company, unless the company is losing a great deal of money, it is very difficult to move institutional investors to vote against management proposals. It is only when an activist shareholder fights for Board seats to change that something will be done. A case in point is a Canadian company called Hudson’s Bay Co which has been a retailer for over 200 years and owns large stores in Canadian cities. The company which is owned by Richard Baker owns Hudson’s Bay, Saks Fifth Avenue, Lord & Taylor, Kaufhof in Europe and other retail sites. Mr. Baker also owns Sears but the two companies are not connected. Mr. Baker made his money in the leverage real estate operations, but the people who follow retail he is seen as a real estate investor rather than a retailer.

Mr. Baker who is one of the top 5 shareholders decided he needed to be paid $54.8 million with some of the money used for retention purposes. Close to $40 million was for share-based awards. Similar to most retailers, HBC has been undergoing vast changes including leasing the top floors of its large retail footprint in the cities to companies such as WeWork. That companies provides shared space for small and medium sized businesses. In Toronto, HBC moved goods from 100,000 sq ft to other parts of the store without reducing inventory the store carries and leased the property for $50 a sq ft which is 6 or 7 times more than it could thought it could make in the retail world.

Linking to dividend paying stocks, as investors we vote for management proposals. Most of the time we vote the way management recommends and that is good. Most of the time management knows the issues and is working to solve problems, and as long as they seem to be executing their plans, we vote for them. Once in a while there are issues such as the pay package which in HBC received 70% of the votes, while the Board of Directors vote was closer to 90% which is typical.  It is an issue but not one that will determine whether the company is profitable or not.

There are more questions than answers, till the next time – to raising questions.