A report released yesterday by RiskMetrics Group showed that investors were more forgiving in their proxy voting than last year, bucking expectations that the dwindling economy would have negatively affected shareholder support during the proxy season. The report, which details investor response to the credit crisis as determined by trends in proxy voting, also found that investors were becoming less tolerant of exorbitant executive pay packages.
Given the deceleration of the market in the early months of 2008, many expected that shareholder discontent would lead to a rise in activist movements—and vicious proxy battles. However, this was not the case: at Wachovia, Morgan Stanley, JPMorgan Chase, Bank of America, and Lehman Brothers, for example, all the directors were elected with more than 90 percent support, a comparable percentage to last year.
“Simply put, the bear market mauled the 2008 proxy season,” said Pat McGurn, special counsel for RiskMetrics Group. “The collapse of Bear Stearns on the eve of the season let most of the air out of the shareholder activism balloon.”
However, 2008 proxy voters were concerned with—and condemnatory of—excessive executive compensation packages in the midst of a financial downturn. Washington Mutual, which suffered a 68.2 percent one-year loss of share value, and had informed shareholders that executive bonuses would be shielded regardless, faced withheld votes of more than forty percent for three of its directors, with six others receiving withheld votes of more than twenty six percent.
At Citigroup, where investors had criticized the severance package for leaving CEO Charles Prince, three directors received withheld votes of more than twenty five percent.
This latest proxy report is available on the RiskMetrics website. A webcast detailing the report’s findings will take place on October 16.
2008 Proxy Voters More Forgiving
A report released yesterday by RiskMetrics Group showed that investors were more forgiving in their proxy voting than last year, bucking expectations that the dwindling economy would have negatively affected shareholder support during the proxy season.
by Joseph McCafferty | October 9, 2008