The Hartford Courant reports that Connecticut State Treasurer Denise Nappier, who led the proposal, said this was the most support by shareholders yet in favor of a vote on executive compensation. Nappier, who is responsible for Connecticut’s $23 billion pension plan (See Feature: Semper Fiduciary ), singled out Sun Microsystems for failing to align executive pay with performance.
Last week, Nappier led a coalition of institutional investors in sending a letter to the 25 largest US corporations, asking that they stop allowing executive pay consultants to do other management consulting for the same companies – a practice seen as a conflict-of-interest, according to the Courant.
The vote by Sun shareholders falls in line with similar efforts to snag some of the control over such matters away from company management, which has traditionally been responsible for setting the compensation packages of top executives and hand picking board members.
However, corporate activists and powerful shareholder groups such as pension funds have been trying to wield more of the power (See Running the Fund: Majority Rules? ).
The backing garnered by Sun shareholders follows strong support in May by Home Depot shareholders also trying to gain a vote on executive compensation (See Corporate Excessive Pay Activists Win Strong Home Depot Support ).
Home Depot shareholder were also trying to get its board to enact a rule requiring directors to be elected by a majority of votes – similar to a proposal made by GM shareholders in June (See GM Shareholders Approve Majority Voting Proposal ).