“Say on pay” vs. proxy access?
Great article published online today from Fortune Magazine covering the ins and outs of “say on pay” and the prospects under a Barack Obama administration.
Normally, articles on executive compensation are written by cheerleaders, openly campaigning for an obvious angle. This article treads even ground and attempts to tackle a few sticky issues:
“There are a few nagging questions raised by all this. For starters, is CEO pay really the hot issue right now, or is this another step down what Obama’s harshest critics see as his “Marxist” path?”
Governance guru Charles Elson provides an interesting take, regarding whether or not “say on pay” is toothless:
“Say on pay is in and of itself but a baby step. Ultimately the issue is replacing the directors who approve the bad pay.”
Really? This might surprise the numerous advocates of executive compensation control.
The more appropriate question not being raised right now… is “say on pay” hurting the prospects for proxy access?
I strongly believe that pushing for the shareholder ability to control business affairs of a corporation is ultimately harming proxy access efforts. Voting for directors is scary enough for corporations. Any impression by boards that they will lose control to an “uninformed electorate” or “meddling parties” should be avoided, and this is precisely the impression that “say on pay” is providing.
And the “advisory vote” qualification isn’t fooling anyone. The corporate community is convinced that shareholder rights groups firmly want the ability to control executive pay, and the advisory vote is just the first step toward greater power.
Proponents for proxy access should encourage the “say on pay” advocates to pipe down. The message to boards should be simple: govern as you please, but allow us to kick you out swiftly when we want to.
