June 6, 2011
Severance Pay Proposal Wins Majority at Lowe’s
– Ted Allen, ISS’s Governance Institute
A shareholder proposal seeking an investor vote on future “golden parachute” arrangements earned 57.8 percent support (based on votes cast “for” and “against”) at the May 27th annual meeting of Lowe’s Companies.The proposal was filed by t e Trowel Trades S&P 500 Index Fund, which is seeking a vote on future severance arrangements that would provide benefits that exceed 2.99 times the sum of an executive’s base salary plus bonus. The North Carolina-based home improvement retailer previously adopted a policy that provides for shareholder ratification of any new agreement that provides for a total cash value severance payment exceeding 2.99 times the sum of the salary plus bonus, but this policy excludes tax gross-ups, which can be significant.
Overall, 80 U.S. shareholder proposals have received majority support this proxy season. Other recent votes include 84.5 percent support for declassification at Neurocrine BioSciences, a 86.9 percent vote for declassification at Thermo Fisher Scientific, and 78.3 percent approval for majority voting at Tessera Technologies.
Meanwhile, more issuers are filing proxy materials that include stand-alone golden parachute votes, as required by the Dodd-Frank Act for companies that seek shareholder approval for mergers and other transactions. Among those companies are: Lawson Software (June 29), K Sea Transportation (July 1), GS Financial (July 7), and Digital Angel (July 14). In addition, the agenda for the June 14 meeting of BioMimetic Therapeutics includes a bundled “say on pay”/golden parachute vote, one of the first ballot items of its kind this year.