It's a bad day to be Bank of America
Wake-up calls and proxy statements
A surprisingly high number of Bank of America shareholders voted for a first-time proposal seeking to end the company's relocation reimbursements for high-ranking execs who lose money on their home sales. That kind of ridiculous perk should make any self-respecting shareholder's blood boil.
The proposal, filed by CtW Investment Group (affiliated with the Change to Win labor group), received 35.5% support. While that's not a majority, corporate governance experts RiskMetrics called this vote significant nonetheless, because first-time shareholder proposals hardly ever enjoy such a significant show of support.
Even more interestingly, Bank of America had appealed to the Securities & Exchange Commission exclude that proposal from its proxy statement, but the SEC staff allowed it to stand.
Caught red-faced and red-handed
More potential corporate embarrassments loom on the horizon, most notably concerning the discrepancies between pay and performance.
Recent data has shown that CEO pay looks as healthy as ever; The Wall Street Journal reported earlier this week that in 2010, the median total compensation of the CEOs of 350 major companies increased 11% to $9.3 million. However, given continued uncertainties in the U.S. economy, and plenty of signs that our tentative economic "recovery" is neither robust nor guaranteed, nobody's forgetting that these folks might not be entirely worth it.
ISS has been busy this year. Out of 1,706 say-on-pay proposals, it has recommended that shareholders vote "no" on 207, or about 12% of the compensation-oriented questions. The Boston Globe highlighted two local companies subject to that humiliating "no" recommendation, Talbots
Blame and shame
For many of these companies, public embarrassment seems long overdue. After so many years of passive investing, shareholders who voice their disapproval could increasingly deter all kinds of corporate excess and abuse.
Underachieving, undeserving executives aren't the only folks who ought to feel ashamed. This kind of ridiculous disconnect embarrasses the very concept of our free markets. So bring on the humiliation! With any luck, it'll make more managers more likely to realize the importance of truly solid performance.
Check back at Fool.com every Wednesday and Friday for Alyce Lomax's columns on ESG (Environmental, Social, and Governance) topics.
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