Submitted by: CSRwire
Posted: May 20, 2009 – 12:00 AM EST
May 20 /CSRwire/ - By CSRwire Contributing Writer Bill Baue of Sea Change Media
Each spring, a limited form of democracy blooms at corporate annual general meetings when investors vote their proxy ballots on shareowner resolutions and other business. This proxy season, early tallies from one shareowner campaign suggest that investors are gaining more of a say on corporate governance. "Say on Pay" resolutions, which seek an advisory vote on executive compensation packages, have received a dozen majority votes this season, according to RiskMetrics -- most recently a 61.5 percent vote at Prudential Financial. And RiskMetrics says more than a dozen companies have agreed to annual say on pay votes, dating back to Aflac's groundbreaking March 2008 agreement with Boston Common Asset Management's request for an advisory vote on pay.
The Say on Pay movement got a big boost in February when the Treasury Department required say on pay votes at all banks receiving Troubled Asset Relief Program (TARP) funding. Influential business columnists Gretchen Morgenson and Joanne Lublin gave another boost this week with positive articles on say on pay in theNew York Times and Wall Street Journal (respectively.) However, some also point out the inherent limitations of the say on pay model for "providing no feedback on what shareholders dislike about current pay plans," according to Boardroom Insider editor Ralph Ward. "By 2010, look for angry investors to notice that their 'Say on Pay' really said nothing."
Ward voices a long-standing critique of the advisory nature of shareowner resolutions. Shareowner activists recognize that this seeming limitation has hidden strengths, as companies must embrace the change requested by shareowners. Sometimes, this change happens incredibly quickly, sometimes it can take years, and sometimes it doesn’t happen if there’s not enough sustained shareowner support.
Trillium also mustered 30.5 percent support for a shareowner resolution asking ConocoPhillips to report on the environmental impacts of expanding Canadian oil sands exploitation -- three percent more than the 27.5 percent it received last year in its initial filing. Trillium and co-sponsor Green Century Capital Management will continue filing the resolution -- and engaging with management -- until the company responds.
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