It was anything but a typical year as shareholders cast their ballots as part of the official tally at many company’s annual meetings this spring. Except for the infrequent proxy fight, shareholders almost always voted with management to maintain status quo. Proxy fights were generally well publicized take-over attempts, and shareholders had to choose between “white” or “gold” proxies. White is usually the color choice for management’s proxy selections while, gold signifies the opposition’s alternatives.
One of the most contentious shareholder proxy votes took place in April, 2009, at the Bank of America annual meeting, when shareholders voted to separate the roles of chairman and chief executive. The vote also required that someone outside the banking industry be named as the new chairman. According to proxy voting service Risk Metrics, it was the first binding shareholder resolution ever to pass at an S&P 500 company.
In an effort to overhaul current finance regulations, one proposal for new legislation announced by President Obama on June 17, is “Say-on-Pay.” According to a statement issued by Treasury Secretary Timothy Geithner, this legislation will grant, “the SEC authority to require companies to give shareholders a non-binding vote on executive compensation packages.” The proposal also requires that only independent directors be named as members of corporate compensation committees.
In fact, the “Say-on-Pay” movement has been building momentum for some time. This year about 100 corporate proxies allowed shareholders to vote for or against the proposal. Management typically advocated a vote “against,” but several companies advised shareholders to vote “for” after voluntarily implementing the “Say-on-Pay” approach.
As disgruntled shareholders continue to demand more accountability from the executives managing publicly traded companies, we are likely to see shareholders band together and vote proxies to make sure their voices are heard by all Boards of Directors. If it has been your habit to take only a cursory glance at the documents the companies you own send to educate you about your choices as a shareholder, maybe it’s time to take a closer look—even to discuss some of these issues with your Moneta Group Family CFO. As shareholders, it is our duty to make well-informed choices and to make sure our votes are counted.