Hermes to push for vote on pay at
By Jeremy Grant in Washington
Published: April 20 2007 03:00
| Last updated: April 20 2007 03:00
Hermes, one of the largest European pension fund managers, has put forward a
proposal requiring a shareholder vote on executive pay at a US company - a
move that reflects the increasing activism of foreign shareholders pushing
for reform of US corporate governance.
The move comes amid increasing concern in the US over excessive pay to
The US House of Representatives is expected today to vote on a bill put
forward by financial services committee chairman Barney Frank that would
require a similar non-binding - or "advisory" - shareholder vote on
UK-based Hermes plans to introduce its resolution at next month's annual
meeting of shareholders of UnitedHealth Group. The healthcare insurance
company has been engulfed by a stock options backdating scandal.
William McGuire, its former chairman and chief executive, was paid $8.7m
last year, according to an Associated Press calculation of salary
disclosures made yesterday in a filing with federal regulators.
Hermes was one of a number of European pension funds that in January wrote
to SEC chairman Christopher Cox warning that shareholders' rights needed to
be strengthened to maintain confidence in the US equity market.
Hermes said in an SEC filing: "We believe existing US corporate governance
arrangements, including SEC rules and stock exchange listing standards, do
not give shareholders enough mechanisms to provide input to boards on senior
UnitedHealth said: "Adopting this practice alone could put the company at a
competitive disadvantage and negatively affect shareholder value by creating
the impression among senior executives that compensation opportunities may
be arbitrarily limited or negatively affected by this practice when compared
with opportunities at our competitors."
Mark Anson, Hermes' chief executive said: "We are more interested in US
companies and it would not be unusual to expect more activity from Hermes in
Corporate governance experts said the Hermes move was likely to followed by
others. Rich Ferlauto, director of pension and benefit policy at AFSCME, the
largest US public service union, said: "Not only is Hermes focused on trying
to engage US companies behind the scenes but is doing so through ownership,
challenging companies more directly."