This excerpt taken from the BAC DEF 14A filed Mar 18, 2009.
Statement of Kenneth Steiner
Investors are increasingly concerned about mushrooming executive pay especially when it is insufficiently linked to performance. In 2008, shareholders filed close to 100 Say on Pay resolutions. Votes on these resolutions have averaged 43% in favor, with ten votes over 50%, demonstrating strong shareholder support for this reform.
To date eight companies have agreed to an Advisory Vote, including Verizon, MBIA, H&R Block, Blockbuster, and Tech Data. TIAA-CREF, the countrys largest pension fund, has successfully utilized the Advisory Vote twice.
RiskMetrics Group, an influential proxy voting service, recommends votes in favor, noting: An advisory vote on executive compensation is another step forward in enhancing board accountability.
There should be no doubt that executive compensation lies at the root of the current financial crisis, wrote Paul Hodgson, a senior research associate with research firm The Corporate Library. There is a direct link between the behaviors that led to this financial collapse and the short-term compensation programs so common in financial services companies that rewarded short-term gains and short-term stock price increases with extremely generous pay levels.
Shareholders at Wachovia and Merrill Lynch did not support 2008 Say on Pay ballot proposals. Now these shareholders dont have much of a say on anything.
The Corporate Library www.thecorporatelibrary.com, an independent investment research firm, rated our company Very High Concern in executive pay. Our CEO Kenneth Lewis had $24 million in executive pay. Mr. Lewis also gained $77 million by exercising options in 2006 according to The Corporate Library.
Meanwhile our oversight Board of Directors for Mr. Lewis is composed of five directors who are designated as Problem Directors by The Corporate Library. This was due to their involvement with the FleetBoston board, which approved a major round of executive rewards even as FleetBoston was being investigated by regulators for multiple instances of improper activity:
Plus three of our directors were designated as Accelerated Vesting directors by The Corporate Library. This was due to their speeding up the vesting of stock options in order to avoid recognizing the related cost:
Patricia E. Mitchell
Charles K. Gifford
Jacquelyn M. Ward
I urge our board to allow shareholders to express their opinion about senior executive compensation through an Advisory Vote: