Dynegy Inc. shareholders on Thursday will vote on a proposal that would require its board of directors to review earnings restatements and recoup incentive bonuses and other awards paid to senior executives for performance targets that the Houston-based company did not actually achieve.
Amalgamated Bank's LongView Collective Investment Fund sponsored the shareholder proposal, which asks the board to make the proposal a policy.
Dynegy restatements from 1999 to 2001 lowered net income by some $320 million, according to the proposal, while Dynegy reported incentive payments to six officers of $28.74 million for bonuses, plus more than 5 million stock options, during the same period. "These payments and awards were presumably based on results reported at the time," the proposal notes. "Given the magnitude of the restatements, it appears that executive payments and awards would have been lower or non-existent had they been calculated on the basis of restated results."
Dynegy issued a statement saying, "In March 2005, we adopted a policy which requires our board to review performance-based compensation of our senior executives following a restatement that impacts the achievement of performance targets relating to that compensation, and to take appropriate action, in the board's discretion, with respect to such compensation following the review." The company said the proposal "could potentially subject a substantial portion of a senior executive's performance-based compensation to the risk of forfeiture, even in circumstances where the board would not otherwise deem it appropriate to pursue full or partial recoupment, in the exercise of its discretion."
The LongView fund owns 149,825 Dynegy shares.