(The Associated Press circulated the following story by Barry Bedlan on October 3.)
OMAHA, Neb. — Union Pacific Corp. will begin requiring its most generous severance packages be put to a shareholder vote, the transportation giant announced Friday.
Shareholders asked for the change at Union Pacific’s annual meeting in Salt Lake City in April, where 56 percent voted in favor of the idea.
Union Pacific’s board of directors met Sept. 25 and adopted a policy that says shareholders need to approve executive severance packages where benefits are three times or more the individual’s salary plus bonuses.
“We’re responding to the shareholders. I don’t think it was something we were overly concerned about,” said Kathryn Blackwell, company spokeswoman. “We haven’t had an executive leave in a number of years who would have been subject to these kinds of severance packages.”
The severance policy will only affect Union Pacific’s 17 top executives, Blackwell said.
Blackwell said no executives who have been terminated at Union Pacific have received severance packages anywhere near three times their salaries.
The policy change was proposed by the Amalgamated Bank of New York’s LongView Collective Investment Fund, which owns about 83,000 of U.P.’s 253.8 million shares outstanding.
“We’re pleased that the company was willing to take this step. It’s just a matter of good governance,” said Cornish Hitchcock, an attorney representing the investment fund.
Shareholders at other large U.S. companies have urged their directors to limit so-called golden parachutes for departing executives in light of management scandals — though not at Union Pacific — and cases of excessive executive compensation.
The Bank of America, Norfolk Southern Corp. and Tyco International are among companies that have recently adopted restraints on executive severance.
Shareholders for other companies, including Sprint, AK Steel and Massey Energy, also have voted in support of nonbinding resolutions calling for similar policies, Hitchcock said.
“The ground has really started moving in the last couple of years,” Hitchcock said. “People are looking at how large some of those pay packages are and they are saying ‘That makes no sense.'”
Shares of Union Pacific gained 19 cents to close at $59.24 Friday on the New York Stock Exchange.
Union Pacific employs about 48,000 people and operates rail lines in 23 states across the western two-thirds of the country.