Corporate Governance

Say on Pay and Aflac

By J. Robert Brown

Celia Taylor writes:

On Monday, Aflac shareholders made history by being the first group of shareholders in United States corporate history to vote in a non-binding advisory capacity on executive compensation. In the historic action, shareholders voted 93.05% in support of the company’s executive compensation policies. Only 2.52% voted against the executive compensation policies; the remaining votes were abstentions.

How much of a victory for say on pay does this action represent? On one hand, companies who worry about shareholder actions being adverse to executive interests may breathe a sigh of relief. However, Aflac’s shares were at an all time high last year, and its CEO Dan Amos is very popular with shareholders. So Aflac may not be the best indicator of what may happen with say on pay initiatives in corporations where shareholders have stronger incentives to admonish executives. This year, more that 90 say on pay resolutions were filed. Companies such as Verizon and Blockbuster who are facing similar shareholder action may not find the results so favorable. The Aflac action shows that say on pay need not be problematic for a corporation, but it does not put an end to the concerns.

Full post as published by The Race to the Bottom on May 08, 2008 (boomark / email).