Accelerated-Vesting Bans Win Shareholder Votes
AGENDA - A Financial Times Service
Published on May 12, 2014
In landmark votes, shareholders of Valero Energy and Gannett separately approved shareholder proposals that would ban accelerated vesting of performance-based executive equity awards if the companies change hands.
The votes were the first time a majority of shareholders supported prohibiting companies from setting aside previously set performance requirements for equity awards upon a merger or acquisition of the company, Scott Zdrazil, director of corporate governance at Amalgamated Bank, told Pensions & Investments. Amalgamated Bank sponsored the proposal at Valero.
The votes on both proposals, held May 1, were nonbinding. The Gannett measure was sponsored by the International Brotherhood of Teamsters General Fund. Each resolution favored pro rata vesting, where unvested shares would vest in proportion to the time an executive served. The proponents contend that their recommendation would better align pay with performance.
Ken Hall, the Teamsters’ general secretary-treasurer, said in a statement, “We do not believe executives should receive a guaranteed windfall in the outcome of a change-of-control when receipt of such compensation could have very little to do with the executives’ actual job performance.”
Valero spokesman Bill Day told P&I the company intends to adopt the proposal prohibiting accelerated vesting. Gannett, in a statement, said its board’s "executive compensation committee values the views of its shareholders and will take the outcome of the [accelerated vesting] vote into account as it considers future changes to the company's change in control plan."
By Marc Hogan