Shareholders fight to stifle compensation panels
Executive compensation has emerged as the top corporate governance issue this proxy season. Compensation panels are being scrutinized at unprecedented levels and shareholders are voting "no" on them when a disconnect between pay and performance is observed.
"The perceived failure of boards of directors to self-regulate and curtail excessive executive compensation has increasingly angered shareholders and incited dialogue regarding legislation to control compensation," states Bill Ide, Sr. Fellow at the Goizueta Directors Institute, "Clearly boards of directors have more work to do in producing compensation formulas that will satisfy shareholders and the public."
Corporate governance thought leaders will gather at the annual Goizueta Directors Institute summit, May 26 and 27 to address the compensation crisis and new mandates that seek to control executive pay. Institutional Shareholder Services (ISS) expects record numbers of corporate requests to authorize shares for use in stock option plans to go down in flames. The group is tracking more than 300 pay and stock option related proposals this year and expects record levels of support for these resolutions. The sharp focus on stock options may signal the end of an era.
The rule-setting board for accounting, Financial Accounting Standards Board (FASB) is addressing executive compensation with what is considered the most dramatic step in its 30-year history.