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More Holders
Back "Say on Pay" in 2008
Risk Metrics says 10 firms
had affirmative stockholder votes this proxy season, up from 8 last year.
August 27,
2008
With the vote by shareholders at Valero
Energy Corp. a shareholder-voting majority at 10 companies supported
nonbinding resolutions calling for a so-called Say on Pay policy during
this year's proxy season, according to Risk Metrics.
Altogether, the shareholder proposals —
offering holders a vote only on the total compensation to be provided to a
company's top five executives, rather than their individual pay packages —
have averaged 42.7 percent support over 56 meetings this year, according
to the proxy research firm. Last year, eight companies had positive votes
on the advisory-only provisions.
None of these companies is required to
institute such a policy, however, since Say on Pay provisions are not
binding. Thus, skeptics wonder how much "say" the investors actually have,
beyond the psychological message that is sent to the company board and
officers.
In April, Sen. Barack Obama endorsed
Say-on-Pay as a part of his bid for the Democratic nomination for
president.
Among the companies receiving majority
support for such a policy this year include Apple Computer, Ingersoll
Rand, Tech Data, and Lexmark. This was the second straight year Say on Pay
proposal won more than 50 percent of the votes at Ingersoll Rand, and last
year, Apple received 46.6-percent support, according to Risk Metrics.
The proxy firm noted, however, that of
the companies receiving majority support this year, only Tech Data so far
had agreed to adopt an annual non-binding vote on pay.
The vote at Valero Energy, however,
offered a twist. The company disclosed in an Aug. 8 regulatory filing that
53.7 percent of shareholders voted for the measure, while 46.3 percent
voted against. The number of abstentions, however, equaled half the number
of affirmative votes. So Valero calculated that the measure received just
42.4 percent total affirmative votes, versus 57.5 percent negative votes,
leading the resolution to fail.
According to its filing, shares voting to
abstain are treated as "present" votes for purposes of determining a
quorum, but have the effect of negative votes when approval for a proposal
requires majority voting power of issued and outstanding shares, or a
majority of the voting power of the shares present in person or by proxy
and entitled to vote.
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