"Chief executives will have to prove day in and day out that they are worthy of such rewards," Challenger said Monday. "With new regulations about full disclosure of CEO compensation we will undoubtedly see more instances of shareholder outcry on this issue," said John Challenger, the consultancy's CEO, in a statement. is predicting more shareholder discontent about spiraling levels of pay. Meanwhile, outplacement firm Challenger, Gray & Christmas, Inc. Last year, the plan filed such resolutions at companies including US BancorpĪnd Home Depot. The AFSCME Employee Pension Plan, for one, is planning to file resolutions this year that would give shareholders a vote about approving CEO pay. Shareholder activismīut shareholders may not have to wait for Congress or regulators to act. Neither the SEC nor Frank has aimed to cap executive pay. However, the full value of the option in the year given and the expensed value will be included in a separate table. But instead of showing options' value in the year granted, a controversial revision just before Christmas allows companies to spread the value of options over several years. Companies must also detail stock-option grants. SEC rules approved last summer direct companies to publish a table showing executives' total compensation, a move designed to bring better disclosure to shareholders. "My sense is that that is more about maintaining pressure" on the Securities and Exchange Commission, Townsend said in an interview. Rather, he says, Frank and other Democrats will use their majority to convince regulators more needs to be done about the issue. Isn't predicting a big push toward legislation. Michael Townsend, a vice president with Charles Schwab & Co., Inc. Still, it's likely that any Democratic initiative about executive pay will need Republican support. Democrats enjoy only a 31-seat majority in the House, and the Senate is evenly split, though its two independents vote with Democrats. Observers say there are several avenues to reining in pay and benefits packages, including congressional legislation, new federal rules and shareholder proxy initiatives.īut congressional legislation will almost certainly be complicated by the narrowly divided House and Senate. Most companies hold annual meetings in March, April and May. "It's going to be one of the, if not the, hottest issues this proxy season," said Amy Borrus, deputy director of the Council of Institutional Investors, a pension group that focuses on shareholder rights. With proxy season approaching, more revelations are expected, thanks to new Securities and Exchange Commission rules about pay disclosure. Leader Lee Raymond left with $357 million. Nardelli walked away with $210 million after battling with Home Depot Inc.Ĭhief Henry McKinnell got a $200 million retirement package in spite of presiding over a 49% slide in the value of the pharmaceutical giant's stock between 20. Investors have seen a growing number of CEOs step down with big compensation deals. His group has called for non-binding votes by shareholders on pay packages. "Given the continued revelations about egregious pay 'll be difficult to vote against something like this," Ferlauto predicts. "I think that there's large shareholder momentum behind the concept," says Richard Ferlauto, the director of pension and benefit policy for the American Federation of State, County and Municipal Employees. One such way to raise the bar is by requiring shareholder approval of pay packages, a right already enjoyed in the United Kingdom. But one way or another, analysts say, sentiment is moving toward an even tighter process for approving corporate chiefs' salaries and benefits. It's unclear if Frank will reintroduce the bill or write a new one-Frank's spokesman, Steven Adamske, says the congressman hasn't decided what course to take this year. Last year, he introduced a bill that would've given shareholders a vote about pay and "golden parachute" packages for CEOs. New House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, is planning hearings on CEO pay this year, and wants to give shareholders more of a say in approving compensation.
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