Despite years of outrage over soaring executive pay, shareholder activists still find it tough to persuade many investors to cast even symbolic votes against management on compensation issues.
As annual meeting season winds down, pay critics have won only a few majority votes this spring on proxy proposals intended to signal disapproval of executives' financial hauls.
More typical was the balloting Tuesday at Yahoo Inc. The Internet firm's shareholders rejected a measure that would have requested company directors to consider new ideas for tying executive pay to the performance of the business.
Another key test of activists' efforts looms today, when shareholders of mortgage giant Countrywide Financial Corp. will consider a "say-on-pay" measure at the company's annual meeting in Calabasas.
The proposal would require the company to hold a yearly shareholder referendum on executive compensation. The vote would be merely advisory, not binding on the company's directors or officers.
Countrywide Chief Executive Angelo Mozilo has become a major target of pay critics in recent years for his hefty compensation packages. He earned $48 million last year, according to a recent Times analysis.
Yet at most large companies whose shareholders had the chance to request similar say-on-pay referendums this spring, the idea was rejected.
The lack of majority backing for the measures has frustrated some corporate governance activists, who had high hopes at the start of proxy season that anger over executive compensation would be reflected in shareholders' balloting.
Instead, most of the votes suggest "nothing close to the level of outrage being voiced at the start of the proxy season," said Patrick McGurn, executive vice president of Institutional Shareholder Services, which advises investors on corporate governance issues, including executive pay.
Some governance experts say the stock market's strength this year, at least until recent days, may have damped investors' interest in sending a negative pay message to managers of the companies they own.
"As the market comes back investors are happy again," said Lawrence Mitchell, a George Washington University law professor and author on corporate governance issues.
What's more, managers of private investment pools such as hedge funds -- which have become huge players in the stock market in recent years -- have themselves been criticized for the often outsized incomes they take home. That may make them more empathetic toward generous executive pay packages when they vote their proxies, McGurn said.
Still, many shareholder activists say the support they've received has been significant. They note that they have in many cases garnered 35% or more of shareholder votes in favor of their pay-restraint advisory proposals this year.
A decade ago, it would have been impossible for such measures to attract more than a handful of votes, they say.
The American Federation of State, County and Municipal Employees was behind say-on-pay proposals that came to a vote this spring at 45 large companies, including Coca-Cola Co., Wachovia Corp. and United Technologies Corp.
On average, 43% of shares were voted in favor of the measures, said Richard Ferlauto, director of pension investment policy at the union in Washington. That was up slightly from last year, he said.
And at four firms -- Blockbuster Inc., Ingersoll-Rand Co., Motorola Inc. and Verizon Communications Inc. -- say-on-pay proposals got the coveted majority votes their backers sought.
"My expectations have been more than surpassed on say-on-pay," Ferlauto said.
Activists say that even substantial minority votes are meaningful given unyielding company opposition to say-on-pay measures.
Countrywide, for example, has urged investors to vote against the say-on-pay proposal on its proxy ballot, saying that adoption of the measure could hinder the company's competitive position by hurting its ability to recruit and retain top executive talent.
Despite the general lack of shareholder backing for the measures, some Democrats and Republicans in Congress want to make say-on-pay votes universal: A bill that has passed the House, and has been introduced in the Senate, would require every public company to hold an annual advisory referendum on executive compensation.
Proponents say a mandated vote would force big investors to look more closely at the pay programs of every firm they own, and would ratchet up the discussion between shareholders and corporate directors about what constitutes a fair level of compensation for executives.
But some shareholder activists contend that say-on-pay votes in any form are useless exercises. "It's dumbed-down activism," said Ed Durkin, director of corporate affairs at the United Brotherhood of Carpenters union in Washington.
Company directors, he said, can't know what to think about a simple yes or no vote on pay, because shareholders could be approving -- or voting against -- any number of aspects of a firm's compensation plan, including salary, retirement programs and assorted perks.
The carpenters union's approach to governance is to focus on pay relative to a company's performance, Durkin said. The aim, he said, is to pressure directors to develop and stick with pay formulas that substantially boost executives' compensation only when the company outperforms its typical peer.
Even that basic idea, however, has struggled to find shareholder backing: It failed to get a majority of votes cast at any of the dozen companies whose proxy ballots included the union's measure this spring.