Aflac Shareholders Have Their Say on Pay

And they overwhelmingly say "yes," in the first vote on executive compensation for top executives.

In the first-ever shareholder vote on a company’s executive compensation, 93 percent of Aflac’s investors said “yes” to the proposed aggregate pay for the five executives named in the insurance firm’s proxy statement.

The so-called “Say on Pay” issue was one of the lightning rods of this year’s annual meeting season, with more than 75 resolutions calling on companies to institute a similar advisory vote submitted to company proxies. Many of these proposals have been getting support from between 30 percent and 48 percent of shareholders, but only two, at Apple and Lexmark, have received majority support.

Last year, a majority of shareholders at eight companies supported such resolutions, including those at Verizon, Motorola, Blockbuster, and Ingersoll-Rand. Verizon and Blockbuster subsequently agreed to adopt the policy.

In all the proposals, the say-on-pay vote is merely an advisory one and not binding, and it offers shareholders a vote only on the total compensation to be provided to a company’s top five executives rather than their individual pay packages. So some skeptics wonder how much “say” the investors actually have.

And in the case of Aflac, the company is not expected to stir up much emotion with its vote since the insurer is widely considered to be shareholder-friendly.

But if a company with a Say on Pay vote were to not alter compensation opposed by shareholders, there could be a backlash against the board of directors’ compensation committee members, who could find themselves targets of “withhold” or “vote no” campaigns.

Say on Pay is, of course, opposed by business groups. But even an aggressive activist investor like the United Brotherhood of Carpenters and Joiners of America thinks Say on Pay is a lazy exercise that doesn’t accomplish much. The union prefers pushing companies to set parameters for designing pay-for-performance compensation plans.

However, the unofficial leader of the Say on Pay movement, Richard Ferlauto, director of corporate governance and pension investment at the American Federation of State, County and Municipal Employees (AFSCME), says the carpenters are overstepping their bounds by pushing for specific metrics.

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