BOB MOON: You may know Aflac for its wacky duck commercials.As of today the insurer will also be known as the first major US companyto give shareholders a say on executive compensation. Shareholder activists say it won’t be the last. Marketplace’s Amy Scott reports.
AMY SCOTT: Back in November, Boston Common Asset Management
filed a shareholder proposal with Aflac. Boston Common is a socially-responsible investment firm. The measure would have allowed investors an up-or-down vote on the company’s executive pay.
But Aflac’s shareholders never had the chance to vote on the proposal. Boston Common’s Dawn Wolfe
says the Board approved it on its own.
DAWN WOLFE: As a result, we agreed to withdraw the proposal.
The vote will be non-binding. But Wolfe says directors won’t be able to ignore it. The U.K. has required a non-binding vote on executive pay for the last four years. And when investors nixed GlaxoSmithKline’s CEO package a few years back, Wolfe says the board took notice.
WOLFE: I think it requires them to think more strategically about connecting pay and performance. And that discussion itself is important.
An estimated 50 companies will face say-on-pay proposals this proxy season.
The trend worries David Nosal. He runs an executive recruiting business. He says shareholders should elect good boards . . . and then let them do their jobs.
DAVID NOSAL: I don’t really believe there’s a place for somebody on the outside. Unless they are integrally associated with the leadership, the operations. If they don’t have that insight, how can they provide balanced perspective?
Of course, shareholders think of themselves not as outsiders, but company owners. And if what happened at Aflac is any sign, boards are starting to listen to them.
In New York, I’m Amy Scott for Marketplace.
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