Cdn. shareholders voting out against rising CEO pay: report
Every media outlet, and MSN is included, loves to rip CEO pay. It’s topical, it’s newsworthy and, in the vernacular of the biz, makes for a good story.
But the key defence of executive pay, which has been ballooning to gaudy ratios for decades, is that public companies agree to fork over such compensation.
Most often by board consultation, many of the fattest cat CEOs are paid so much because that’s what a controlling group has decided they’re worth.
But perhaps those days are coming to a close in Canada now that shareholders are being given more power over what pay is afforded the bosses of their public companies.
Two years ago, “say on pay” votes were introduced for shareholders of public companies in Canada. Now, where company boards were once the ones to agree how much to pay an executive based on the edge he or she gave a business, Jack and Jill Shareholder are given more power to weigh in on the choice.
And while it’s a small sample size, it appears Canadian shareholders are finally getting the chance to put their feet down on unfavourable executive pay.
According to the Shareholder Association for Research and Education (SHARE), an increasing number of public companies are receiving protest votes over the compensation proposed for their executives.
Based on SHARE’s research, the proportion of companies facing protest votes (falling below the 80 per cent support level) jumped to 10.6 per cent this year, up from just 1.6 per cent last year. Some 4.5 per cent of Canadian companies that utilize say on pay votes received less than 75 per cent of shareholder support this year, compared to zero per cent last year.
“The numbers do tell us that there are some increasingly disgruntled shareholders willing to use this vote,” Laura O’Neill, SHARE policy director, told the Globe and Mail.
O’Neill concedes the shift is modest, though further proof lies in what the shareholders of major Canadian companies have recently said about executive pay.
Canadian Pacific Railway got just 62 per cent support for its compensation plan this year, down from 97 per cent in 2011. Similarly, Astral Media Inc. was forced to withdraw a $25 million bonus to outgoing CEO Ian Greenberg after failing to win shareholder support for the handout, according to the Globe and Mail.
Would you wish you had a vote in what the executives of your company are paid each year?
By Jason Buckland, MSN Money