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TESS VIGELAND: Ever wanted a say in the boss’ pay? Today, investors in the insurance company Aflac became the first shareholders of a major US company to vote on the salaries of top executives. Corporations have generally frowned on the idea, but after today’s vote, seems like they don’t have much to worry about. Aflac’s shareholders overwhelmingly rubber-stamped a pay package put together by the Board of Directors.
John Dimsdale reports.
JOHN DIMSDALE: Aflac is one of only a small handful of companies to voluntarily submit their compensation packages to a shareholder vote. CEO Dan Amos says he was nervous before investors rendered their verdict.
DAN AMOS: I felt like with the return we’ve given the shareholders it would pass, but I wanted it to do better than pass, and because we were the first company to do it, I really had no idea what the results would be
In the end, 93 percent of the shareholders endorsed the board’s pay proposal for the company’s top five executives, including a $12 million package for Amos, who’s headed the company for nearly 19 years.
AMOS: Since I’ve been CEO, our stock has gone from $1.80 a share to $67. I would hope that would be in large part the reason, and also the way that we actually pay for performance. If they do well, then I do well as a CEO.
Not all boards of directors see it that way. Few have been willing to allow input from shareholders, but Florida State management professor Wayne Hochwarter says today’s vote could change things.
WAYNE HOCHWARTER: Shareholders who are yet to be shareholders may look at that and say you know, I kind of like the fact that I might be able to get involved in decision making. I might be able to have some input. I may feel like I’m part of the team, other than simply just the financial support.
Hochwarter says company boards willing to give up some management control can also share the risk of making bad management decisions with shareholders.
In Washington, I’m John Dimsdale for Marketplace.
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