The New York City Employees’ Retirement System (NYCERS) is calling on Home Depot, Blockbuster Inc., and Par Pharmaceutical Cos. to allow shareholders to approve the compensation of senior executives. “Institutional investors are fed up with the unbridled excesses of executive compensation in the U.S.,” said New York City Comptroller, William C. Thompson Jr., in a statement. “We have had enough of bonus payments, salary increases, retirement benefits, and other payoffs from equity-based plans that are often not even remotely correlated with the performance of executives, but instead result from market and industrywide fluctuations in stock prices.”
The issue was first introduced in the United States by the American Federation of State, County and Municipal Employees (AFSCME) in the 2006 proxy season. The trio of resolutions specifically call on the boards of Home Depot, Blockbuster, and Par Pharmaceutical to adopt a policy that stockholders be given an opportunity at each annual shareholders’ meeting to vote on an advisory resolution to ratify the compensation of named executive officers. The resolutions state that shareholders should be informed that the vote is nonbinding and would not affect any compensation paid or awarded to the named executive officers.
The announcement was made before Bob Nardelli surprisingly stepped down as chairman, CEO, and president of Home Depot on Wednesday morning. Thompson noted that companies in the United Kingdom and Australia already allow their shareholders to cast advisory votes on the compensation report. “It is time for American companies to adopt this important policy for improving transparency and disclosure, and board accountability for executive pay,” he added.