USA: US company gives shareholders a vote on pay
The Financial Times (“FT”) have reported that Aflac has become the first US based company to give its shareholders a vote on the pay of its CEO and other top management team members by way of a vote at the company’s AGM on 5 May. This follows a week in which the CEO of U.S. telecoms company Verizon announced a similar intention, according to the FT.
UK FTSE listed companies (but not other UK companies) are already required by law to disclose a raft of detail in their accounts in the form of a directors remuneration and to give shareholders a vote on that report. Shareholders are unable to use a vote against to block pay matters. However, the potential political and market impact of such a vote is significant.
In 2007 Senator Barack Obama sponsored a US House of Representatives Bill, The Shareholder Vote on Executive Compensation Act. The Bill adopts a similar approach to the UK model. Shareholders would not be able to bind the directors if they vote against pay issues. However, it seems unlikely to make much headway due to lack of political consensus. The Bill was passed with 97% of democrats supporting and 71% of republicans in opposition according to independent legislation tracker Gov.Track.us. The last recorded action saw the bill disappear into a committee – a potential graveyard, perhaps until after autumn elections.
Links: > FT article
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