Media Blog

Strange Behavior out of England

I remember reading something about this in the history books.  I believe it is known as “capitalism” and it’s when the market works to determine things like pay packages for senior executives.  Let’s keep an eye on it and see if it actually works:

LONDON — Shareholders, angered by lofty executive pay at a time of dwindling earnings, turned their wrath on Royal Dutch Shell on Tuesday, voting against compensation packages for senior managers.

The vote, at the annual meeting in The Hague, followed a similar outcome at the general meeting of the Royal Bank of Scotland last month. A British shareholder group is urging its members to reject the pay packages of executives of Lloyds Banking Group at its shareholder meeting in June.

A month ago, at the general meeting of the British bank Barclays, a substantial minority of shareholders voted against the re-election of the chairman, Marcus Agius.

Shareholders routinely endorse executive compensation packages for the previous year at their annual meetings. The vote is not binding and does not affect what the executives have already received.

But the vote by Shell shareholders against the pay packages for 2008, set by an independent committee, sent a strong message to the company’s executives.

“Shareholders are beginning to show their muscles,” said Justin Urquhart Stewart a founder and marketing director of Seven Investment Management in London. “Their actions may be limited, but they can make a noise and embarrass people, and embarrassment goes a long way in this environment.”

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