April 29, 2008

Say on Pay: PIRC Says “Thumbs Down” for Aflac

Hat tip to Jim McRitchie’s for pointing out that PIRC – one of the proxy advisors in the United Kingdom – has issued a research report that recommends that shareholders vote against Aflac on its say-on-pay proposal at the company’s annual meeting. Given that the UK is one of those countries with experience regarding say-on-pay, I believe this is noteworthy for all of us. We have posted a copy of the PIRC report in the “Say on Pay” Practice Area on

So why is this development noteworthy? It probably won’t impact Aflac’s ability to garner majority support at next week’s meeting since it’s reported that RiskMetrics has recommended a vote in favor of Aflac’s pay package – but it might cause some companies that were contemplating allowing this type of non-binding resolution on their ballot to reconsider. And maybe the publicity of the PIRC report will cause Aflac to adjust its pay practices for next year (but I doubt it unless Aflac’s proposal doesn’t get majority support given what the CEO Dan Amos has said in his flurry of recent interviews where he is asked about his executive pay views). Both the RiskMetrics and Glass Lewis policies regarding “say on pay” are posted in the “Say on Pay” Practice Area.

Recently, I blogged my thoughts about “say on pay” – this WSJ article from yesterday quoted a number of governance experts that have similar concerns about unintended consequences from say on pay.

Say on Pay in Europe: Heating Up?

As noted in this RiskMetrics article, shareholders in the United Kingdom are challenging executive pay practices more than ever before during this proxy season. BP had 9% voted “against” and another 27% “withheld” – which is a high level compared to what has been happening in the UK during the past few years.

And in March, shareholders of Philips, a Dutch electronics company, rejected an amended executive pay plan; which was the first time that has happened. But it wasn’t a “first” for long as VastNed lost a vote a few weeks later and Corporate Express pulled its plan from the meeting agenda after pressure from shareholders, as noted in this IR Magazine article.

AFL-CIO’s “Executive PayWatch”

In this podcast, Vineeta Anand, Chief Research Analyst for AFL-CIO Office of Investment, talks about the AFL-CIO’s popular online tool “Executive PayWatch,” including:

– What is Executive PayWatch?
– What is the theme this year and what do you hope to accomplish?
– How do people typically use it?

– Broc Romanek