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Joined on 10/23/2007 Posts: 2
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2009 Annual Meeting of Stockholders and Proxy Voting Results

17 July , 09:38 AM

Today Dell held its 2009 annual meeting of stockholders in Austin, Texas. This meeting comes on the heels of our analyst meeting earlier this week and gives us the opportunity to share our views directly with our shareholders that attended either in person or online via the webcast.

The meeting included presentations by both our CEO Michael Dell and CFO Brian Gladden, which can be downloaded from the Shareholder Meeting Event page. Key messages from Michael included his reiteration of Dell's strong core assets, the company's drive toward a consistent and disciplined operating agenda, the improvement of its core business in each of the business units, and its expansion of capabilities in the enterprise to deliver customer-focused solutions.

To elaborate, one of Dell's key advantages is its set of strong core assets including its large installed base and direct customer relationships. Dell is able to leverage these assets, acting quickly to meet the needs of our customers with disruptively great value and IT simplification. Dell is focused on continuing to provide this value that customers have come to know and is committed to providing a broader set of customer solutions through organic investments and strategic alternatives. This strategy should allow Dell to steadily shift its portfolio to higher margin offerings and more valuable businesses.

Brian provided a financial update to shareholders and outlined Dell's operating agenda for FY2010. We are currently experiencing one of the most difficult macro-economic environments of our time, but even before the downturn Dell had made the decision to operate with a specific agenda: 1) focus on prioritizing profitability; 2) protect our strong balance sheet and improve working capital focus; 3) aggressively take costs out of the company and deliver at least $4B in cost savings; 4) recapture product leadership through improved design and solutions; 5) target growth in emerging countries; and 6) evaluate and invest in growth initiatives that shift our portfolio to higher margin offerings.

Moving to the formal business portion of the meeting, we had four proxy proposals voted on this year. According to preliminary results, the two routine company proposals both passed. The election of directors passed with favorable votes for each director of at least 83% and the ratification of our independent auditor passed obtaining at least 99% of the total votes cast "For" the proposal. In addition, two stockholder proposals were presented this year: Proposal 1 - Reimbursement of Proxy Expenses and Proposal 2 - Adopting a Simple Majority Vote. Proposal 1 did not pass, receiving 35% votes "For" the proposal; however, Proposal 2 was approved, receiving 69% votes "For" the proposal. Final results will be posted on the event page once they are available.

After the formal vote, Michael, Brian and I took questions from the audience and via online submissions for about 20 minutes before wrapping up the meeting.

Ultimately, Dell will continue to provide disruptively great value to its customers while balancing its financial goals of liquidity, profitability, and growth. Michael and Brian both commented on this focus throughout their presentations today, so I encourage you to listen to the replay of the meeting.

Thanks for following us on DellShares.

-Rob

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shiv139
21 Jul 2009 04:35 AM

Returning shareholder value through buybacks is powerful. It has several advantages over and above dividends. For departing shareholders, demand for shares by the company allows for stronger relative share values, which provides a better capital gain or smaller capital loss on exit. Buybacks are also very tax effective for continuing shareholders; the share count reducing means that the continuing shareholder owns a larger percentage of the company following a buyback; in effect the continuing shareholder has succeeded in securing a higher percentage ownership without a tax burden. Compare this to the dividend re-investment option where there would be a significant tax cost associated with dividend income, which leaves less dollars available for investment. Buybacks also allow employees to be compensated through stock grants and option awards without any threat of dilution. Finally, buybacks can easily be suspended during difficult economic times without having an adverse impact on share prices compared with the reaction on suspending a dividend. Why then not simply return shareholder value using only buybacks? There are a few very significant reasons; firstly a buyback program is not regarded as a dividend by investors. Thus income investors tend to shun shares which reward shareholders only through share buybacks; this lack of investor interest has a significant impact of market value of shares. Secondly, companies are not very good at handling share buyback programs. There is a tendency to buy while shares are relatively expensive and not buy during periods of economic risk when shares are undervalued. When a Company buys its own shares, it is in effect speculating in its shares. I would trust Warren Buffett with a buyback program based on market timing because his business is investing; and when I invest in BRK, I do so for expertise in investing. But for a normal Company the focus is returning shareholder value not investing activity. By this I mean, buy backs should be systematic, with a total payout used to buy back shares during the payout year regardless of market value. Dividends are dangerous too. When a company targets a payout ratio of say 50%; during tough times, suspending dividends might be the outcome. And this is not good for share values. But dividends are very good because they create investor interest which draws liquidity to the share and ensures market values are closer (or even over) to fair values. This is particularly true when a company is large and mature thus unable to benefit from liquidity arriving from buzz and from a large investor base who focus on growth stocks as opposed to on value stocks. It is for this reason I believe a combination of dividends and buybacks is the most effective mechanism for returning shareholder value. Suppose a company returns value through dividends with a payout of 25%; it is likely that such a dividend will be sustainable even in a bad year. The company could return a further 25% payout through a buyback program; in a rough year such a program could easily be suspended with a smaller negative impact on share values. I do realize that Dell shareholders have voted no to dividends. However, this is on account of the management not recommending one. I am sure they would vote yes if a dividend was recommended by management. In the circumstances, it would be interesting to hear exactly why Dell’s management does not support a dividend.