As populist anger rises over executive pay amid the recent fallout from the finance industry meltdown, Edison International last week announced that it had joined a short list of L.A.-area companies giving shareholders an advisory role to set executive compensation – the so-called “say-on-pay” vote.
The approval represents a reversal of the Edison board’s opposition. In a proxy vote at the company’s annual meeting in April, the board had recommended a “no” vote on say-on-pay. However, shareholders narrowly approved the concept, and the board then re-examined the issue and finally adopted the policy.
Edison joins KB Home and Occidental Petroleum Corp. as the only L.A.-area public companies – besides banks and other recipients of federal bailout funds that must have say-on-pay policies in place – granting shareholders an advisory vote on executive pay.
Shareholders at Edison will get their first say on the company’s executive pay policies at the company’s upcoming annual meeting in April.
But shareholders will only get to consider the company’s executive compensation philosophy and policies as outlined in the annual proxy statement. Edison spokesman Charles Coleman said the policy does not apply to specific compensation amounts granted to executives.
Furthermore, the say-on-pay shareholder votes that are taken each year are advisory only and not binding on the board.
Shareholder activist groups that have been pushing for more say on executive compensation at public companies nationwide said this is part of the compromise that has made say-on-pay policies more palatable to companies.
Several other local companies, including Walt Disney Co., face shareholder proposals for say-on-pay votes at their annual meetings this year. Shareholders at Activision Blizzard Inc. overwhelmingly approved a shareholder proposal for say-on-pay in 2007, but the company has not formally adopted the proposal.
Nationwide, more than 100 public companies are facing say-on-pay proposals from shareholder activist groups at their annual meetings this year.
Rosemead-based Edison, through its Southern California Edison subsidiary, supplies electricity to 13 million people in Southern California. It is the seventh biggest public company, based on market cap, with headquarters in Los Angeles County.
The trend toward say-on-pay seems to be building momentum amid outrage over bonuses paid to executives at big banks and financial services companies that received federal bailout funds after the market meltdown of September 2008.
“This is part of a big populist movement that’s a reaction to grievous mistakes made by boards,” said Joel Kurtzman, senior fellow at the Milken Institute in Santa Monica.
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