Ethical Performance
inside intelligence for responsible business


investors press Securities and Exchange Commission on pay

March 2007

Institutional investors have urged the US Securities and Exchange Commission (SEC) to allow shareholder advisory votes on executive remuneration.

Thirteen investment groups from five countries, including the US, have asked SEC chairman Christopher Cox to scrap rules forbidding annual meeting votes on executive pay at US companies. Making directors more accountable to shareholders would bring the US closer into line with the UK, where shareholder votes on executive compensation reports have been required since 2003.

This would amount to a breach in the regulatory wall between US companies and investors.

The call is spearheaded by the Universities Superannuation Scheme, the UK’s second largest pension fund. In a letter to Cox, the funds say the SEC should permit a system similar to that also pertaining in Australia and Sweden, in which shareholders may show disapproval of a board’s compensation report through a vote.

The SEC has already tightened the disclosure requirements for executive compensation, but the signatories, which include ABP, F&C, Morley, PGGM and Standard Life Investments say ‘additional disclosure, by itself, is not likely to encourage pay-for-performance’.

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