CVS Caremark and Wells Fargo this week joined the growing list of U.S. issuers that plan to hold advisory votes on executive compensation.
February 2010 Archives
On Monday, the Securities and Exchange Commission announced several measures that seek to improve the rate of proxy voting by individual investors.
The SEC finalized amendments to its so-called “e-proxy rules,” under which companies may send a notice about the online availability of proxy materials, instead of bearing the expense of mailing a full set of proxy materials to every investor.
The Council of Institutional Investors (CII) is asking its members to lobby Senate Banking Committee members to keep proxy access and majority voting provisions in the financial reform legislation that is now before the panel.
Senator Christopher Dodd, who chairs the committee, is expected to release a revised draft of legislation, the “Restoring American Financial Stability Act of 2009,” later this week, according to CII. A mark-up hearing likely will occur next week. “There are reports that the revised draft will eliminate any corporate governance measures,” CII noted in an alert to members today.
Dodd’s original bill, which was unveiled in November, included provisions to mandate an annual advisory vote on executive compensation, and to require issuers to use a majority voting standard n uncontested director elections. His original draft bill also affirmed that the SEC has the legal authority to issue a rule on proxy access.
The Business Roundtable and other business groups have urged the Banking Committee to remove the governance provisions from the revised bill. In a recent letter, the groups warn that those provisions “will lead to serious unforeseen (and foreseeable) consequences that will inhibit job creation, endanger the ongoing economic recovery, and prevent the American economy from reaching its full potential.”
In response to shareholder proposals, Bristol-Myers Squibb has agreed to hold a "say on pay" advisory vote on executive compensation in 2011, while Windstream plans to hold an advisory vote in May.
In a Feb. 10 letter to the Unitarian Universalist Association, which filed a shareholder "say on pay" proposal this season, a Bristol-Myers lawyer said the advisory votes would be held at least every two years, although the New York-based drugmaker expects that federal legislation will be enacted before then that will specify the frequency for advisory votes. The association filed a similar proposal last year, which received 48.4 percent support (based on votes cast "for" and "against").
Windstream, an Arkansas-based telecommunications firm, announced the pay vote as part of a series of governance improvements on Feb. 17. The company also adopted a majority voting bylaw and a "claw back" policy. In addition, Windstream appointed an independent director, Dennis Foster, as its board chairman. He replaces Francis X. Frantz, who had served as chairman since July 2006, but who is not considered an independent director under Nasdaq Stock Market listing standards, the company said.
Windstream adopted these changes after significant investor support for reforms sought by labor investors. At the 2009 annual meeting, a "say on pay" shareholder proposal received 49.4 percent support, while an independent chair resolution earned 41.3 percent of votes cast.
With Bristol-Myers and Windstream, at least 47 U.S.-based companies have pledged to hold a voluntary vote on shareholder compensation, or have already done so, according to RiskMetrics Group data.
In December, the House of Representatives approved financial reform legislation that would require public companies to conduct annual pay votes. Senator Christopher Dodd has introduced a more far-reaching bill that includes a "say on pay" vote mandate. The Senate Banking Committee likely will hold a mark-up hearing on that bill in early March, committee staffers said.
Paul Myners, the financial services secretary to the U.K. Treasury, renewed his call for better governance and engagement during a Feb. 9 speech to the National Association of Pension Funds' (NAPF) Corporate Governance Seminar on Responsible Investing, where the NAPF launched its "Practical Guide to the Institutional Shareholders Committee (ISC) Stewardship Code."
Bank of America has agreed to pay a $150 million fine and adopt governance reforms, including an annual advisory vote on compensation, to resolve the U.S. Securities and Exchange Commission's probe over its Merrill Lynch acquisition. However, the Charlotte-based banking giant faces a new lawsuit from New York's attorney general over its disclosures to investors before the December 2008 transaction.
The SEC settlement, announced today, appears to be the first time in years that the commission has sought specific governance reforms that go beyond existing disclosure rules.
More than a dozen U.S. hedge funds have sued Porsche and two former executives alleging the company misrepresented its intentions with respect to automaker Volkswagen, leading to a "short squeeze of historic proportions." The funds are seeking $1 billion in damages.
The complaint, filed in U.S. District Court in New York on Jan. 25, contends that Porsche, maker of the iconic 911 sports car, obfuscated its holdings in Volkswagen while misrepresenting its intent to acquire Europe's largest carmaker. When Porsche disclosed in October 2008 that it controlled more than 70 percent of Volkswagen, shares of the latter shot up as short sellers bid up the limited amount of free float in an effort cover borrowed stock. A nearly five-fold spike in Volkswagen's stock price brought on by short sellers rush to buy the stock briefly made the Wolfsburg-based carmaker the world's most valuable company.
Shareholders and management are set for a face-off at a Feb. 11 meeting of German chipmaker Infineon Technologies, as activist fund manager Hermes' campaign to oust chairman-designate Klaus Wucherer picks up steam.
Several prominent institutional investors--including DWS, Germany's largest mutual fund--have voiced some measure of support for a proposal to install Willi Berchtold as chairman, whose candidacy was put forward by a group of investors, including BNY Mellon and Legal & General.