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Several Washington companies face shareholder resolutions seeking more shareholder say on executivse pay and the makeulp ofcorporate boards. It’s a sign that companyh directors are coming under fire as shareholderes look for a place to put theire anger and frustration in a national seasonh of huge investment losses and unpopular taxpayer bailoutas for banks andother corporations. “Shareholderzs are looking at their portfolios. They are taking a look at theirr 401(k) plans. They are seeing theirr paychecks. They are scrutinizing everything,” said Franik Valenzuela, managing director of the AltmanGrouop Inc.
, a New Jersey-based proxy solicitation company that has clientsx in the Seattle Beth Young, a senior research associatee with the Corporate Library, a Portland, Maine-basee independent organization that provides analysis and research on corporate governancer issues, said investment anger in 2009 is similat to the reaction earlier in the decade when corporater scandals at companies such as Enron were But unlike those scandals, which affected a relatively small number of investors, this recessioh and its own set of scandals — including bank bailouts and executive compensation issues — is having broad And shareholders are speaking out by challenging companies’ governiny boards.
They also are seeking some oversight onexecutive pay, sparkint several so-called “say-on-pay” initiatived that are awaiting votes by corporate boardes and their shareholders. Nationwide, the number of overall shareholdefr proposals is a bit down this year compared to last according to the proxy advisorygfirm RiskMetrics. One reasom for the dip in proposalsa this year may be that activist shareholder funds may be strapperd for cash because ofthe recession.
Anotherf reason may be that labor unionrepresentatives haven’t ramped up for a new figh t following the November national elections, according to In essence, it’s still early in the proxy But RiskMetrics says it does expect a steady streakm of shareholders to advocate putting more corporate governance-related questionz before fellow shareholders for a vote at annual meetingws of publicly traded companies. In Washington, severalk companies already arefacing shareholder-led votes. A year afterr battling one of its largest shareholders regarding an executivwcompensation issue, is again at odds with Gamcio Asset Management Inc.
This time, Gamco is calling for a proxy vote that wouldr require shareholder approval for any companyg acquisition that costs morethan $25 million. Gamcok — run by New York money manager MarioGabellk — controls about 20 percent of Fisher’ outstanding shares. Fisher has been at odds with Gabellik on this andother issues. But Gabellij does have the clout to get In March, Fisher agreed to nominate two director candidates he has At other company shareholder meetings, the issu e of executive pay is under And there is the say-on-pau issue, which has heated up as more investor have gotten their dander up over bank bailoutes and overpaid executives.
Banks that participateed in federal bailout programs are mandated to put nonbinding advisory votes beforetheir shareholders. Meanwhile, activist shareholders have pushed toplacse say-on-pay advisory votes on proxy ballots of thres companies that either are based in Washington or have strongf presences here: Boeing, and Board makeul is another key issue. Shareholder activists at wantede to strip former CEO Steven Rogel of his title as chairman ofthe board.
Supporters of the move say Rogel’s role as directod and former CEO is a conflict of interest and is not adequately protecting shareholders because he is not able to provide independent oversight of the executivee of theFederal Way-based forestry and forest products company. Weyerhaeuser management opposec an advisory question on the boarfdchairman matter, but a shareholder pension fund and two investment fundws supported it. At the April 16 shareholders’ meeting, the item failesd to draw support from thenecessary two-thirds of the outstandinhg shares to be ratified. Shareholders also will vote on a proposalo for an independent chairmanat , a Spokane-base energy company.
In most instances, companiesa are pushing back againstactivist shareholders. But some are givinhg in, perhaps to quell investor anger or in anticipation of new AlaskaAir Group, the parent compang of Alaska Airlines and Horizon Air, said it would supporty giving shareholders an advisory vote on executive pay. Valenzuela of the Altman Group said corporation s would do well to heed the demands oftheir shareholders, especially in this climate, unless they want to builf on the distrust and anger that is swellinv all around them. “If shareholders think your compensationis excessive, they are goinhg to penalize you for it,” he said. “You have to run a tightg ship.
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