The 2008 U.S. proxy season could be one of the most contentious in recent memory following the Securities and Exchange Commission’s decision to exclude proxy access proposals, and as shareholders continue to seek curbs on executive pay. Thus far, labor and public pension funds have filed two proposals calling for access—at New York-based JP Morgan Chase and Bear Stearns—in a bid to test the agency’s decision in court. Meanwhile, dozens of “say on pay” proposals—calling for an advisory vote on compensation—have been filed, once again placing the issue front-and-center during the annual meeting season.
Some shareholders also intend to challenge companies over their exposure to the subprime mortgage crisis now roiling capital markets. Homebuilders are being targeted with a broad range of proposals that include requests to set up a “mortgage lending compliance committee,” while labor fund officials say directors at many financial companies will become targets for “vote no” campaigns.
Concerns over compensation will not be limited to calls for advisory votes on pay in 2008, moreover. Novel proposals will include demands for companies to adopt a policy on the use of so-called 10b5-1 stock-selling plans, and those to limit or bar tax gross-ups for senior executives. Another resolution seeks to place limits on executive employment agreements.
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