With at least $312 billion of asset write-downs and losses by financial firms since the start of 2007, investors thought this would be the perfect year to pressure corporate boards on executive pay and give shareholders non-binding advisory votes on executive compensation. In the past few years, shareholders in various companies have been trying to get more say on executive compensation through so called say-on-pay proposals, without much luck. Similar to past years, these proposals have failed at this year’s annual meetings at some of the major financial corporations that have posted the largest asset write-downs and credit losses since the beginning of 2007 such as Citigroup, Merrill Lynch, Bank of America and Morgan Stanley.
These defeats demonstrate the difficulty in changing policies at companies where large institutional shareholders such as Fidelity Investments “tend to oppose or abstain on say-on-pay proposals.” For instance, the proposals introduced by the American Federal of State, County and Municipal Employees for Citigroup and Morgan Stanley actually received less support this year than last year. According to Institutional Shareholders Services, it is “a little surprising given the shareholder anger at a lot of the companies” given the current financial crisis. Also, a compensation analyst at the Corporate Library suggests that institutional shareholders view these proposals “as a protest against the company’s compensation policy, and they don’t want to do that.”
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