Shareholders ask say on executive pay

More and more shareholders want to let management know what they think about executive pay.

The issue, known as "say on pay," has been gaining steam for years as the gap between the highest- and lowest-paid workers grew.

Scandals at such companies as the Home Depot Inc., where chief executive officer Robert Nardelli got a $210 million package despite shareholder complaints that he didn't deserve it, added momentum recently.

So far this year, investors have put 266 shareholder proposals related to executive pay on proxy statements, about twice as many as a year ago, according to proxy adviser Institutional Shareholder Services.

Locally, Comcast Corp.'s proxy, which came out last week, included a proposal that would give shareholders the right to vote on whether compensation to senior executives was excessive, appropriate or too low. The proposal said Comcast's executive pay was excessive. CEO Brian L. Roberts' compensation last year was about $27.8 million.

Union protesters at the March 14 Toll Brothers Inc. annual meeting in Horsham unsuccessfully urged shareholders to withhold votes for Carl Marbach, chairman of the board's compensation committee, because of chairman and CEO Bob Toll's $17.5 million bonus in 2006.

Shareholders in Wyeth, which has headquarters in Madison, N.J., and pharmaceutical operations in Collegeville, also will get to vote this year on the appropriateness of that company's executive pay. CEO Robert Essner received a pay package worth $18.4 million last year.

At Atlanta's Coca-Cola Co., where CEO Neville Isdell was granted $20.9 million in total compensation last year, executive-pay activists are asking for a say on pay - and more. Another proxy proposal there asks shareholders to limit the pay of the company's five top executives to $500,000 a year.

Management at those companies and at others facing similar proposals are advising shareholders to vote against them, arguing that their pay practices are in keeping with good corporate-governance principles.

Paul Hodgson, a senior research associate at the Corporate Library, which studies executive pay and other corporate-governance issues, said he believed shareholders should have a say. After all, they own the company.

"I think it's a great idea, and I think companies who vigorously oppose it are afraid that they will not see favorable votes," he said.

Pay resolutions are nonbinding, and so would serve to let shareholders share their views with management.

Also, members of the House Financial Services Committee, led by Rep. Barney Frank (D., Mass.), approved a bill last week that would give shareholders an advisory vote on pay.

In a statement on the bill, Frank said he did "not understand those who argue that the people who make up our stock markets are collectively very wise, but at the same time are somehow incapable of rendering a coherent opinion of what they should pay those they employ to run the corporations that they own."