Thirty US investors representing assets over $1 billion to have written to 17 financial companies asking for a say on pay this proxy season. The letter, addressed to addressed to the CEO and Chairs of the Compensation and Governance Committees of the companies, was coordinated by Walden Asset Management and the State of Connecticut Treasurer’s Office.
Asserting that enacting a shareholder vote is “a timely and needed corporate governance reform” and “a reasonable and modest step compared to other remedies under consideration to address executive compensation in the industry,” the letter asks the companies to follow the lead of others, including Goldman Sachs, State Street and Bank of New York Mellon, who have already voluntarily adopted the practice.
The letter signatories include major US pension funds such as CalSTRS, CalPERS, TIAA-CREF, State of Connecticut, AFSCME, the United Methodist Church General Board of Pension & Health Benefits, the Council of Institutional Investors together with a variety of religious investors, trade unions and socially responsible investment managers.
Recipients of the letter include: JPMorgan Chase, Morgan Stanley, Bank of America, Citigroup, Wells Fargo, U.S. Bancorp, Waddell & Reed, Northern Trust, BB&T, Capital One Financial, American Express, PNC Financial Services, SunTrust, Fifth Third Bancorp, Comercia, KeyCorp, and Regions Financial.
In a follow-up letter to the business community, Tim Smith of Walden said that a management-supported advisory vote may be “a moderate, reasonable response to the executive compensation issue, and is not the fringe proposal it was perceived to be 2 or 3 years ago. Proposed ‘solutions to the executive pay issue’ now range from the reasonable to the zany, from small specific reforms to large systematic changes, I am sure some of these “solutions” are causing tremendous angst among many in business dealing with compensation as new Congressional legislation is discussed or Treasury Department regulation is promulgated.”
Speaking to Manifest about the progress and reaction to the initiative, Smith re-inforced the view that the letter was designed to “buttress” the say-on-pay debate and that the combination of public pressure and shareholder resolutions were beginning to show results; Wells Fargo’s board will be discussing the letter at their February board meeting and JP Morgan Chase has confirmed that it will be including an advisory vote on compensation in its 2010 proxy.