Institutional investors have urged the US Securities and Exchange
Commission (SEC) to allow shareholder advisory votes on executive
remuneration.
Thirteen investment groups from five countries, including the US, have
asked SEC chairman Christopher Cox to scrap rules forbidding annual
meeting votes on executive pay at US companies. Making directors more
accountable to shareholders would bring the US closer into line with
the UK, where shareholder votes on executive compensation reports have
been required since 2003.
This would amount to a breach in the regulatory wall between US companies and investors.
The call is spearheaded by the Universities Superannuation Scheme, the
UK’s second largest pension fund. In a letter to Cox, the funds say the
SEC should permit a system similar to that also pertaining in Australia
and Sweden, in which shareholders may show disapproval of a board’s
compensation report through a vote.
The SEC has already tightened the disclosure requirements for executive
compensation, but the signatories, which include ABP, F&C, Morley,
PGGM and Standard Life Investments say ‘additional disclosure, by
itself, is not likely to encourage pay-for-performance’.
