Taking a stand against executive excess

Shareholders of US-listed companies were given the right to vote on the compensation arrangements for a company’s named executive officers in 2011. But these voting resolutions are advisory and not binding, unlike in the UK where a binding shareholder vote on pay was introduced in 2014. In the US they act more as a vote of confidence from the shareholders on the remuneration arrangements in place.

During the second quarter, a common theme of concern for us was the lack of linkage between reward and performance, particularly across the pond. In many instances, long-term remuneration awards begin vesting after only 12 months and are not subject to the achievement of performance targets. Irrespective of other concerns, this was the primary reason for Newton voting against the compensation arrangements of the named executive officers and against proposed remuneration plans. Newton also voted against the members of the compensation committee who were seeking re-election to the board.

We will continue to vote actively against executive pay packages that are not aligned with performance and the creation of long-term value for investors no matter where the companies are domiciled.

Ian Burger – Newton, a BNY Mellon company

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