Despite concerns raised by some analysts and shareholders, investors in Applied Materials ( AMAT) re-elected the company's board of directors Wednesday and passed a controversial stock-compensation plan. All 10 members of Applied's board stood for re-election; company officials did not immediately disclose how many votes were withheld from individual directors. Meanwhile, shareholders approved the company's proposal to increase the number of shares available under its current stock plan by 70 million shares. That proposal did draw a sizable opposition, as some 30.2% of shareholder votes were cast against the plan. Proxy adviser Glass Lewis
recommended that investors vote against seven members of Applied's board and vote down its stock-plan proposal. The research firm criticized the stock plan as being "excessive," noting that Applied employees saw about $350 million in gains from stock-options exercises last year, while the company saw its revenue drop 11% and its bottom line turn from a profit to a loss. Glass Lewis opposed the re-election of the four members of Applied's audit committee and the three members of its compensation committee. The compensation committee members drew criticism in part for a large stock and option grant they awarded to Applied's new CEO. The audit committee came under fire for the sizable fees Applied paid to auditor PricewaterhouseCoopers for nonaudit services. Glass Lewis also criticized the audit committee for not allowing shareholders to vote on the company's choice of auditors. The California Public Employees Retirement System and the California State Teachers Retirement System, or Calstrs, both voted against the company's stock plan and withheld their votes from the members of its audit committee. Additionally, Calstrs voted against two alternate members of the audit committee. In a speech to shareholders, company chairman James Morgan extolled Applied's corporate governance practices. While the Sarbanes-Oxley bill forced other companies to completely revamp their boards or their governance, Applied had made few changes, Morgan said. Meanwhile, governance research firms such as GovernanceMetrics and Institutional Shareholder Services have both rated Applied's practices highly, Morgan said.