The insurance company Aflac has become the first big US company to offer its shareholders a vote on executive pay.
The Fortune 200 corporation made the announcement shortly after
institutional investors urged the US Securities and Exchange Commission
to require public companies to include an advisory shareholder vote on
executive remuneration at annual meetings (EP8, issue 10).
The decision was partly a result of a recent shareholders’ proposal,
led by Boston Common Asset Management, calling on the company to reveal
details of its executive pay plans. From 2009, shareholders will be
able to vote on the pay packages of Aflac’s top five executives.
The votes will be advisory, but will allow shareholders to register
disapproval if they consider settlements fail to reflect performance.
Dawn Wolfe, Boston’s social research analyst, welcomed Aflac’s
decision. She said there had been no particular concern that Aflac
executives were overpaid, only that shareholders had no voice in the
remuneration decisions.
Any switch towards allowing votes on executive pay in the US would
bring the country into line with Australia, the Netherlands and the UK,
where advisory or non-binding shareholder votes on the topic are
required by the regulatory authorities.
More than 121 US companies are facing shareholder resolutions on executive pay in this annual meeting season (see analysis).
Average chief executive compensation in the US is now at least 450
times greater than the average worker’s wage, compared with 45 times in
1980.
