Investors reluctant to tackle exec pay
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.
