Boards and shareholders look for better ways to communicate as some investors believe corporate directors are giving them the silent treatment.
Some investors are accusing corporate directors of giving them the silent treatment. In February, Bank of America decided to adopt “say on pay.” They didn’t have much say in the matter, however, since legislation mandated that any company accepting TARP funds would have to accept shareholder votes on pay. The banking giant then filed a petition with the Securities and Exchange Commission (SEC) asking for permission to omit proxy proposals on pay. The move angered shareholders who wondered why BofA didn’t simply pick up the phone and ask them to withdraw the proposals, since the bank was already adopting the measure.
“I am shocked that in this time of extreme financial crisis for the bank that you would spend the time and legal expenses to challenge a resolution of this sort when the bank could simply ask the proponent to withdraw in light of the fact that you were now implementing the advisory vote,” wrote Tim Smith of Walden Asset Management in a letter to BofA executives. Walden was behind one of the say-on-pay proxy initiatives. “Is this a sign that bank executives don’t even know how to have a simple conversation with their shareowners to work out a basic agreement?” he scathed.
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