More Shareholders Say on Pay

Risk Metrics has noted the continuing progress of Say on Pay.  According to the post, shareholders at eight companies have passed say on pay proposals, up from seven last year.  As the post notes:

• As reported previously, “say on pay” proposals have received majority support at Apple, Lexmark International, PG&E, South Financial Group, Tech Data, Motorola, and Alaska Air this year. Most recently, industrial manufacturing company Ingersoll Rand reported that investors gave 54 percent support to a pay vote proposal, while dissidents at computer server firm Rackable Systems said a similar proposal received the support of a majority of votes cast. The average support for pay vote proposals is also higher this year. With the Ingersoll Rand and Rackable results, the average support for “say on pay” has reached 43.4 percent over 46 meetings where preliminary or final results are known, according to RiskMetrics Group data. In 2007, about 50 pay vote proposals averaged 42.5 percent support.

The companies from last year?  Ingersoll (not a typo, the proposal has been approved by shareholders twice at this company), Motorola, Verizon Communications, Blockbuster, Activision, Clear Channel Communications, and Par Pharmaceutical.

Say on pay in the end has some modest value, giving shareholders at least an advisory voice in compensation.  The need for a shareholder voice demonstrates the complete failure of state law and the reliance on independent directors to control executive compensation.  The focus has therefore shifted away from the board to shareholders.  While companies will slowly see the number of say on pay proposals increase, the main area of interest is federal legislation, with Congressman Barney Frank and presidential candidate Barak Obama favoring legislation to mandate say on pay.