Wells Fargo’s shareholders get say on pay again

New story from IR magazine's Brad Allen:

Bank joins ranks of say-on-pay volunteers

Wells Fargo & Company, for the second year in a row, is giving shareholders a non-binding advisory vote on executive compensation at its annual meeting. The company announced the move this morning, after the board of directors adopted the measure.

As Congress is writing financial reform legislation, a say-on-pay provision is likely to be included. A rewritten Senate bill is expected as soon as tomorrow, Thursday.

Brad Wilks, managing director at Sard Verbinnen and chairman of NIRI, says the move by Wells Fargo is ‘prudent and well advised’ and ‘part of a growing trend – something that will eventually become standard practice for US public companies.’

Describing it as ‘a bow to the inevitable – especially for financial services companies that have been the beneficiary of significant taxpayer-funded bailouts,’ Wilks predicts that banks in particular ‘will continue to be under close scrutiny [on compensation] for many years to come”

Microsoft Corp, Apple and Verizon are among the large public companies that have voluntarily adopted say on pay.

According to Wells Fargo, shareholders will cast their non-binding vote on executive compensation for the five most highly compensated executive officers named in Wells Fargo’s 2010 proxy statement, which is expected to be filed with the SEC in mid-March.

Last year Wells Fargo, along with the rest of the recipients of funds from the Troubled Asset Relief Program (TARP), was forced to allow shareholders a say-on-pay vote. The vote was overwhelmingly in management’s favor. Having since paid back its TARP money, Wells Fargo could have foregone the vote in 2010 but faced pressure from shareholders to do it again.

‘Our stockholders have always been able to communicate with the board on matters of interest to them. This year's advisory vote gives them an additional opportunity for participation in the company's compensation process,’ said Steve Sanger, chair of the board’s human resources committee and retired chairman and CEO of General Mills, in Wells Fargo’s press release.

By Brad Allen