CVS Caremark and Wells Fargo this week joined the growing list of U.S. issuers that plan to hold advisory votes on executive compensation.
CVS Caremark, the largest U.S. pharmacy chain, agreed to conduct an advisory vote after a “say on pay” proposal filed by the Connecticut Retirement Plans and Trust Funds earned 61.6 percent support in 2009. The Connecticut pension system is withdrawing the resolution it filed for this season. The Rhode Island-based firm plans to hold its first pay vote in 2011, according to Connecticut pension officials.
“The public is outraged by oversized paychecks that reward poor performance, and rightfully so,” Connecticut State Treasurer Denise Nappier said in a Feb. 23 press release. “By granting shareholders the right to provide input on its pay practices, CVS Caremark has demonstrated that it has nothing to hide in the manner it compensates its executives. More companies should do the same.”
Wells Fargo, the fourth largest U.S. bank by assets, plans to hold its first voluntary vote at its annual meeting in late April. The San Francisco-based company was required to conduct an advisory vote last year when it participated in the U.S. government’s Troubled Asset Relief Program, and received 95 percent support for its pay practices. ”Say on pay” resolutions filed by Walden Asset Management received 35 percent support at Wells Fargo in 2007, and 30 percent approval in 2008.
“Our stockholders have always been able to communicate with the board on matters of interest to them. This year's advisory vote gives them an additional opportunity for participation in the company's compensation process,” Steve Sanger, chair of Wells Fargo’s human resources committee, said in a company press release.
So far, 49 U.S.-based companies have agreed to hold voluntary pay votes, or have done so already. The pace of “say on pay” adoptions has picked up in recent months; at least 23 issuers have announced or agreed to pay vote commitments since the end of the spring 2009 proxy season, according to RiskMetrics Group data.
Even with these recent agreements, it appears likely that dozens of shareholder “say on pay” proposals will appear on corporate ballots this year. As of Feb. 15, there were 47 pending resolutions, according to RiskMetrics data.