Can shareholders and management make it together?

by Eleanor Bloxham for Fortune, March 14th, 2011.

Like the farmer and the cowboy, shareholders and management can be friends too — maybe not close friends. Signs of newfound respect are percolating between the two, often quarrelsome, parties.

Informal polls of corporate board directors find that about 5% view the proxy as a marketing tool for the board and the company. But that may be changing.

As proxy season gets underway, some early, behind the scenes discussions between shareholders and companies are exhibiting a welcome break from the past: a new tone of respect.

Tim Smith, Director of ESG Shareowner Engagement at Walden Asset Management, says the new requirement for say on pay — giving shareholders a voting voice on executive compensation — is a big part of the reason for the changes he is seeing: “Say on pay is stimulating more dialogue,” he says.

Managers and directors don’t want the headache of no votes on executive pay packages — and they don’t want unhappy shareholders.

This is a welcome change from the past, when corporations almost always viewed shareholders with opinions as either annoyances or downright enemies. A slammed door and a “not-invented-here” policy were de rigueur corporate responses to shareholder proposals.

But two companies early on in this proxy season plan to take a different tact. They may not agree with shareholders, but they aren’t going to be so quick to judge. (continue reading… )


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