Investor Ire Over Pay Rises

By CFA Institute:
By Matt Orsagh, CFA, CIPM
It was only a matter of time. As we get deeper into proxy season (a preponderance of companies hold their proxy votes in the spring—yes it’s different in Australia, but we’ll get to that so be patient), it was inevitable that the number of contentious annual “say-on-pay” votes would rise. In the slow, sometimes halting recovery from the financial crisis — that now includes a double-dip recession in the U.K. — investors are showing little patience for executive pay packages that don’t appear to link pay for performance. The say-on-pay vote has proven an elegant compromise addressing the issue of investor frustration over executive pay plans that don’t appear to hold executives accountable for long-term performance. Increasingly, investors are using a “no” vote as a cudgel to beat compensation committees back into line when investors perceive disconnects between pay and performance that are inadequately addressedComplete Story »