Annual shareholders meetings are pretty standard, except when they're not.
Even though I’ve never been to one of these meetings, from what I can tell, the shareholders take the day off work, hang out at nice place that probably is near a golf course, they eat some scrumptious food and they listen to the CEO talk about how awesome the company is. I’m sure there’s more to it. But that’s the gist, right?
There is some business. Shareholders take some customary votes on members of the board of directors, who will be company’s auditor for the year and executive payment.
From what I’ve read in Securities and Exchange Commission filings, normally, those votes go off without a hitch. I can’t think of a vote that didn’t get approved by at least an 80 to 90 percent margin at this spring’s round of annual meetings of midstate companies. Even Donegal Group Inc., which is dealing with a highly publicized activist stockholder, got all of its recommendations passed in the 90 percent range at its annual meeting in April.
But perhaps those rubber stamping days are coming to an end. According to an article this week in American Banker, New York Community Bancorp Inc. shareholders voted down the company’s executive pay rates. CEO Joseph Ficalora made $9.8 million in his 2013 compensation package, according to the report.
The vote is nonbinding (Does anyone know why? Why even vote then?) but could be a sign of things to come. In Pennsylvania, we went through this sort of thing a few years ago with the “clean sweep” effort to oust Pennsylvania lawmakers who voted themselves a pay raise in the middle of the night. That clean sweep resulted in a large number of incumbents losing their seats to upstarts carrying the torch of pay raises.
Maybe this is just now spreading to the corporate world. Maybe shareholders are just as frustrated at its leaders for not being careful with their investment money as the people of Pennsylvania were in 2006 when it came to their taxes. Maybe it’s a reflection of the political world that got people thinking more about the way they vote on anything. And when the majority of the shareholders of New York Community Bancorp in Westbury, N.Y., all got together, they spoke with their votes.
This could be an isolated, one-time thing, or the continuation of some long fight I’m not privy to. In either case, then this vote is a blip on the radar that is mildly interesting, and nothing more.
But that’s exactly what those deposed lawmakers thought when the pay raise disaster was just starting to gather steam.