The Shareholder ForumTM


"Say on Pay" Proposals

Forum Home Page

"Say on Pay" Home Page

Program Reference


For information about the panel presentation reported in the article below, see


Financial Times, November 13, 2008 article


Financial Times


John Gapper's Business Blog


The president-elect wants a say on pay

November 13, 2008



About this blog
John Gapper blog
I am the FT's chief business commentator and this blog is about business, finance, media, technology and related matters. I live in New York so there is a bias towards US topics but I range more widely. Comments and criticism, which hopefully are at least as interesting as anything I write, are welcome. There is more about me on my columnist page.


Not so long ago, the “say on pay” movement - the effort by institutional shareholders to get US companies to have non-binding votes on executive compensation - seemed to be losing steam. But there is quite a head of steam now.

Not only have federal bail-outs for financial companies made taxpayers more angry about high executive compensation but Barack Obama, who pushed the idea in the Senate, has been elected as the next president.

The change in atmosphere struck me this morning as I listened to a panel discussing the topic at a Manhattan breakfast organised by the Drum Major Institute for Public Policy, which was founded during the Civil Rights movement.

Of course, you might expect a bunch of people from union and public sector pension funds, which have been among the leading forces pushing “say on pay” to be gung-ho about their campaign and its chances of success.

But what struck me was the renewed sense of self-confidence that this was actually going to happen, whether or not many US corporations like that.

Timothy Smith of Walden Asset Management, a “socially responsive” fund management group, put it this way:

“We very much expect that Congress will act and we will have an advisory vote on pay. We are encouraging companies to act in a statesmanlike way and stand up and say ‘We are not afraid of our shareholders.’”

The idea also got support from James Keyes, the chief executive of Blockbuster, which is one of the few US companies to have voluntarily accepted a non-binding vote on pay. He said it was preferable to legislation and it “works extremely well”.

The political atmosphere is also shifting. Vonda Brunsting, a pension official of the Service Employees International Union, cited a recent conversation with his father:

“People have seen the galvanising effect of the bailout on executive pay. When the bailout was unfolding my father called me. He is a very mild-mannered man but he went on a tirade about executive compensation and I agreed with every point he made.”

The terms of the debate speak to the gulf between how shareholders related to corporate boards in the US and in countries such as the UK, where companies now face non-binding votes on pay.

Many US executives remain hostile to the idea, perhaps suspecting that unions and public pension schemes would curb their pay for ideological reasons as much as for shareholder value.

Lloyd Blankfein, chairman and chief executive of Goldman Sachs, gave his reasons for opposing it at Goldman’s annual meeting:

“It would create a cloud, a constraint, a limitation on decisions that have been at the heart of what a board has done.”

Opponents argue that, if shareholders are really unhappy, they can mount a proxy battle to replace the board. But that strikes me as a blunt instrument. If shareholders want to influence pay without waging all-out war, surely that is fair enough?





This Forum program is open, free of charge, to anyone concerned with investor interests relating to shareholder advisory voting on executive compensation, referred to by activists as "Say on Pay." As stated in the posted Conditions of Participation, the Forum's purpose is to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant is expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

The organization of this Forum program was supported by Sibson Consulting to address issues relevant to broad public interests in marketplace practices, rather than investor decisions relating to only a single company. The Forum may therefore invite program support of several companies that can provide both expertise and examples of performance leadership relating to the issues being addressed.

Inquiries about this Forum program and requests to be included in its distribution list may be addressed to

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.