Angry Shareholders Demand Change

Angry Shareholders Demand Change - 2/25/2009

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2009 News and Press Releases

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

Angry Shareholders Demand Change, With Corporate America On The Ropes, Shareholder Activists Are Hoping For Big Victories This Proxy Season, Particularly On Measures Tied To Executive Pay.
David Ellis

CNNmoney . February 25, 2009
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EXCERPT: At long last, angry shareholders may finally have their day. In the coming weeks, investors will find themselves steeped in the annual ritual known as proxy season, a time where corporations give stockholders a rundown on their operations and discuss other issues near and dear to investors' hearts. This year, shareholders, particularly those at major banks and other financial institutions, have a litany of grievances related to the current economic crisis: inadequate risk management practices, insufficient oversight by board members and oversized pay packages doled out to some bankers. And that's to say nothing of the value of their stock holdings, which are just a fraction of what they were a year ago. "Investors are angry about the losses they have suffered," said Amy Borrus, deputy director at the Council of Institutional Investors, a non-profit association of public, union and corporate pension funds. "But there is a sense of increased opportunity. Suddenly, a lot of what shareholders want seems to be coming their way." One concession that investors are aggressively angling for is for Corporate America to make big changes as to how they determine executive pay. Shareholder activists have pitched dozens of measures so far this year aimed at giving investors a vote, or a so-called "say on pay", when determining compensation packages for senior management. From embattled institutions like Citigroup (C, Fortune 500) and automaker General Motors (GM, Fortune 500) to consumer products giant Colgate-Palmolive (CL, Fortune 500) and computer maker Hewlett-Packard (HPQ, Fortune 500), investors have ratcheted up the pressure in the hopes of more closely aligning executive pay packages to a firm's overall performance. Such measures have failed to garner broader support in recent years due largely to a lack of consensus on the issue among large institutional shareholders, such as public pensions and mutual funds. Activists may get their way But that may be changing as shareholder activists win over other hard-hit investors. In addition, now that the government owns stakes in many large banks, the interests of shareholder activists are now closely tied with that of taxpayers and lawmakers.

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