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Compensation / Financial Accounting
Both directors and employees should be reasonably compensated, however, we will vote against any resolution to make such compensation excessive. Examples of resolutions that we will vote against include excessive annual total compensation for outside directors or for chief executive officers (see
Proxy Voting Guidelines: Management Proposed Resolutions for triggers). We will support shareholder resolutions asking to review severance pay packages provided to senior employees and the correlation between this compensation and the individual's or corporation's performance during the manager's tenure. We will vote on proposals to increase bonuses to senior management on a case-by-case basis, after reviewing the specific circumstances of the company.
We will support resolutions that call for greater disclosure in reporting of total compensation packages received by senior management, including pension plans and stock option plans, as well as reports on relative compensation levels between the highest and lowest earning employees.
We will oppose any resolution that seeks to provide pension plans to non-employees (such as non-employee directors) and higher compensation payout when a change of ownership occurs (such as "golden parachute" provisions for executive management in the event of a takeover).
We will support resolutions to provide stock option grants to both directors and executive management, provided that these grants include a performance-based vesting schedule. An example of this type of vesting schedule is one that divides the entire amount of options into smaller amounts that are granted when a specified performance milestone is achieved. To make sure that excessive amounts of stock options are not granted to the top-ranking employees, we will support resolutions that restrict the amount of shares granted to a single individual or executive relative to the total amount of shares granted. Further, the total number of options granted should be limited to minimize the overall dilution of company shares.
We support increased transparency in financial reporting. We will vote in favor of proposals to adopt the accounting practice of expensing stock options. We will also support resolutions that require management performance to be based on actual operating profit, calculated without including any pension fund surplus that a company may enjoy.
We will support resolutions to provide Employee Stock Purchase Plans, which are intended to promote active employee ownership of a company. We will, however, place limits on the degree to which these shares may be discounted below market price.
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