(the following appeared on the Florida Times-Union website on May 2, 2011.)
JACKSONVILLE, Fla. — It happens every spring.
As publicly traded companies prepare for their annual shareholders meetings, the companies issue proxy statements that include data on how much money their chief executive officers made last year. That makes the CEOs unhappy, because everyone learns how much they were paid.
It also makes shareholders unhappy, because they see how much of the companies’ money is paid out to CEOs.
It probably won’t be any different this year, but at least shareholders now have a chance to express their views. Under mandate of a new federal law, public companies are asking shareholders to vote to approve the pay packages of their top executives.
But the so-called “say-on-pay” provision, which was part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, is not binding on the companies. They don’t have to take any action based on the shareholder vote.
Perhaps surprisingly, the new law is not having a big impact on CEO compensation packages.
A Towers Watson analysis of proxy statements filed by 170 large corporations by late March found that companies are getting overwhelming support for their compensation programs, with three-fourths of the companies getting more than 90 percent approval. One reason for that is that public companies have proactively reached out in advance to their largest shareholders to make sure they are on board with the pay packages before the vote, said Larre.
The AFL-CIO, which annually publishes a survey called Executive PayWatch to highlight large CEO pay packages, is hopeful that the Dodd-Frank law will bring changes. One provision of the law, which has not gone into effect this year, will require companies in the future to disclose the ratio of CEO pay to their median worker pay.
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