Pay proposals draw support from investors

NEW YORK — Two new pay proposals are receiving unusually high marks at annual shareholder meetings this year, bearing out the sentiment that executive pay has become a hot-button issue for investors this season.

A proposal that asks boards to dole out executive bonuses only when a company outperforms its peers received a preliminary tally of 49 percent of the votes at data storage company EMC Corporation, for example. That proposal — as well as a separate one that asks for a shareholder vote on executive pay packages — has regularly received more than 30 percent of the votes at other companies as well.

New shareholder proposals typically receive less than 20 percent of votes and commonly don’t top 10 percent, pay watchers said.

“The votes suggest that these proposals are resonating with investors who believe there is still a lot of work to be done in better aligning executives’ pay with company performance and long-term shareholder value,” said Carol Bowie, director of the governance research service division with proxy advisery firm, Institutional Shareholder Services.

Shareholder proposals allow investors to raise governance and social issues at annual shareholder meetings, which tend to take place between February and June of each year. Resolutions are typically nonbinding.

Companies don’t have to implement the recommendations, even if they are approved by a majority of shareholders.

The current numbers still represent a preliminary count. Companies will release their final tallies in their 10-Q reports later this year.

Also important to consider is that proxy season is still in swing, and shareholders have yet to cast their votes at all the companies where these proposals are in place.

So far, though, they’re showing strong support for first-year proposals, said Bowie. By comparison, a high-profile campaign asking shareholders to withhold votes from some directors of Pfizer Inc.’s last week received no more than 22 percent of the votes, despite support from well-known investors like Vanguard Group founder John Bogle.