I noticed the editorial “Say on pay, gauge of apathy?” in the June 15 Pensions & Investments, and wanted to bring an additional detail to your attention that I feel was overlooked. Specifically, the current voting system for say-on-pay votes allows broker voting to affect the vote results.
You cite two examples in the editorial for questioning whether shareholders are apathetic — Citigroup Inc. and Bank of America Corp.
Through looking at the voting data at Citi, one can see the thumb-on-the-scale effect of broker votes. At Citigroup, broker votes made up 46% of the vote. Studies have shown broker votes go predominantly to management. If the broker votes are removed from the totals, the results indicate that nearly 30% of shareholders apparently protested Citi's pay this year (despite RiskMetrics Group's ISS Governance Services' recommendation in favor of Citi's say-on-pay proposal).
Say-on-pay vote at Citi:
•for 3,287,458,436, 84.16%;
•against 618,660,115, 15.84%;
•broker non-votes 1,732,444,835;
•for without broker votes 1,555,013,601
•against without broker votes 618,660,115
•true for without broker votes 71.54%
•true against without broker votes 28.46%
I believe the same pattern should bear out at Bank of America (which has yet to release vote totals and the number of broker votes in its election).
John Keenan
American Federation of State,
County and Municipal Employees
Washington
