Shareholders Become More Active in Executive Pay Debate

Just because every other company is doing it doesn’t mean all shareholders are going to sit idly by and dole out huge pay packages to executives who aren’t producing equally high rates of return for investors.

The Seattle Post-Intelligencer reported this weekend that a shareholder of a Southeast bank holding company has proposed a resolution for the company’s annual meeting, that basically asks, "If we shareholders aren't doing very well, why should you executives?"

The shareholder’s resolution claims that even though the company’s stock fell over three years, top executives received salary and bonus increases of 12 percent, 21.2 percent and 10.5 percent during the same time, not counting the stock options, grants and retirement benefits they were also paid.

"It seems that something is wrong when executives are compensated this well when in the same time period the shareholders (owners) have seen their value of a share decrease," the shareholder's proxy statement says.

This shareholder is not alone and others are starting to get much more vocal about stemming the tide of runaway compensation at the same time investors are seeing their rates of return plummet. Investors are doing their research and finding that some executives fail to produce at numerous companies, but continue to be hired by one after another at ever increasing compensation rates.

"If we set up a compensation program that rewards short-term results, we will get short-term thinking and results," a CPA told the Post-Intelligencer. "If we compensate CEOs with huge bonuses for making the number one year in a row, they will burn down the company to get to that goal."

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