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Obama move adds to
momentum for say on pay
Feb
06, 2009
Still some
wariness about blunt advisory votes
President Obama’s new
curbs on executive pay, benefits and perks apply narrowly to banks receiving
future bailout funds, but observers see the restrictions having wider effect
for all companies.
Even absent legislation, giving shareholders an advisory vote on executive
compensation is likely to be a consideration for all boards. ‘In the
environment before the collapse, the momentum was already there for say on
pay,’ says Lynn Joy, a senior consultant at Exequity, which advises boards
and management on compensation issues. ‘This gives it even more.’
In an open letter, Timothy Smith, senior vice president with Walden Asset
Management, says he sees firms embracing the practice. ‘It seems clear that
the advisory vote increasingly fills the space of a moderate, reasonable
response to the executive compensation issue and is not the fringe proposal
it was perceived to be two or three years ago,’ he writes. ‘Other reforms
like clawbacks, golden parachutes, golden coffins, even salary caps, are now
front and center in the compensation debate.’
Joy, though, is a bit wary of simple up-or-down votes on compensation, and
argues that shareholders may need ‘a range of expression’ more than yes or
no. That could be accomplished with more refined and specific proxy
proposals. ‘Shareholder voting is not taking advantage of where technology
is,’ she says. ‘Why not let shareholders vote on several aspects of the pay
package?’
By
Anna Snider
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