Employees Starting to Vote Against Executive Pay

Employee ownership plans are often one of the largest blocs of ownership in public companies, almost always through ESOPs or 401(k) plans. Traditionally, employees have either not voted their shares at all or supported management. Gretchen Morgensen, in a New York Times column on April 21, says this may be changing. Morgensen notes that at Wal-Mart, "a proposal from a small group of workers appeared on this year's proxy. It is the first employee-shareholder proposal to be put to a vote at that company, and it, too, centers on executive pay. The employees want the board to do an annual analysis, ensuring that Wal-Mart's pay plans are set up to discourage top management from making capital investments that hurt returns." Verizon has faced similar employee concerns. This few actions are a long way from an active employee shareholder movement, but as concerns about executive pay increase, Moregensen thinks employees may start to use their power more aggressively.