U.S. Shareholders Shift Focus To "Say-On-Spending"

The latest proxy round for US Fortune 100 companies has seen a 30 per cent drop in the number of say-on-pay proposals from shareholders.

As the 2011 season draws to a close, executive compensation has accounted for only 12 per cent of the total number of shareholder proposals tabled at the annual meetings held so far this year.

Dodd-Frank is the primary explanation for this, according to James Copland, the author of the findings and a director of the Manhattan Institute for Policy Research. Simply put, the crisis-driven legislation makes a shareholder vote on pay a requirement at annual meetings.

But the lesson for companies is give shareholders what they want and watch their attentions turn to their next squabble with company management.

Political spending has jumped up the list this year, reveals Copland. Shareholder proposals on the topic are up 13 per cent on the same figure for the previous three yeas. Political spending accounted for 32 per cent of the total number of shareholder proposals in the first half of 2011 and this figure looks only set to rise as the US presidential race cranks up a notch.

labour unions, socials funds and religious groups were behind the vast majority of proposals, although to date none have passed a shareholder vote.

[Article by James Chambers, IR magazine]

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