AmerisourceBergen shareholders want annual 'say on pay'

AmerisourceBergen Corp. shareholders have spoken, and they want the right to vote annually on the pay packages of the company’s senior executives.

At the annual shareholders meeting Thursday, a majority of the votes were cast in favor of holding an advisory vote, or “say on pay,” each year, rather than every three years, as the board of the drug wholesaler had recommended.

In addition, shareholders approved the compensation arrangements for the top management of the Valley Forge company.

Thanks to passage of the Dodd-Frank financial-regulation law last year, such votes are going to be quite common in the spring, but the outcomes of the votes are not binding on boards.

For its part, AmerisourceBergen said it would take the vote results under consideration and make a determination by early summer on the frequency of future executive-pay votes.

But I’d be surprised if the board bucked the will of its shareholders, because annual votes appear to be the preference of large institutional investors. At the end of January, 39 such investors, including the California Public Employees Retirement System and Philadelphia’s Friends Fiduciary Corp., publicly called on companies to support annual “say on pay” votes.

In addition, the influential proxy adviser Institutional Shareholder Services Inc. has said it would throw its support in favor of companies that provide annual votes on compensation practices. ISS says an annual vote provides “the most consistent and clear communication channel” for shareholder concerns.

Still, beyond sending a message, what effect, if any, can a nonbinding vote have on either the level of compensation or its rate of change?

The recent recession, financial crisis, and bank-bailout restrictions certainly restrained the growth of pay at many companies. With most banks having repaid the emergency capital they received from the federal government, we can see that pay practices at the top seem to be bouncing back to their crisis levels.

Until shareholders vote down compensation packages at more companies, especially high-profile ones, I’m not sure “say on pay” is the way to change how compensation committees make their decisions.


In Wednesday’s column about a possible sale of A.C. Moore Arts & Crafts Inc., I mentioned other recent acquisitions of companies in the $28.3 billion craft and hobby industry, including Michaels Stores Inc. and Jo-Ann Stores Inc.

However, I incorrectly included a 40-year-old company as being sold that has never changed ownership. The privately held Hobby Lobby Stores Inc. of Oklahoma City has 469 stores in 39 states and has opened 25 to 35 stores a year for several years.

So how did it wind up in the column? There is a similarly named company, Hobby Lobby International Inc. in Brentwood, Tenn., that makes and distributes radio-controlled airplanes, helicopters, and boats. It was bought by a serial entrepreneur named Mark Cleveland in early 2009.