Shareholder annual meetings usually are very staid and scripted events. Top executives speak, congratulate themselves for the previous year (almost regardless of how the company performed) and take a few friendly questions from shareholders. There are a few issues to be voted with outcomes all but pre-determined.
But shareholders have been finding their voice to speak out against management. Citigroup shareholders last month rejected the compensation plan approved by the board of directors. It's the first time shareholders of a major bank rose up and pushed back against an executive pay plan. The bank's retiring chairman called the rejection "a serious matter."
While these "say-on-pay" votes are required by law, companies are not required to listen. On Wednesday, Bank of America shareholders will become the latest to be asked for their blessing on corporate pay. This vote comes after the bank agreed to multibillion-dollar settlements over mortgage securities gone bad and foreclosure practices. The value of Bank of America shares plunged last year, although it has recouped some of those losses in 2012.
The size of corporate executive pay packages has grown exponentially faster than that of workers. But the great majority of companies have no trouble getting shareholders to rubber-stamp executive pay. Many of these executives are reaping the rewards of stock options granted during the bear market. The stock rally has lifted the value of those options resulting in big pay days. While the mandatory vote on executive pay gives shareholders a voice, they can best be heard by deciding whether or not to be a shareholder at all.
Tom Hudson, anchor and managing editor of "Nightly Business Report," can be followed on Twitter@HudsonNBR.