A provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act, say-on-pay was meant to give shareholders a chance to voice their opinions on compensation packages for a company's top executives, which some saw as rising too quickly and often without merit.
The provision went into effect in 2011.
Though it has made big news when shareholders vote down proposals -- Chipotle shareholders made waves earlier this month when they overwhelmingly rejected the restaurant chain's compensation package -- generally the proposals have passed by wide margins.
That's led some to say the votes, already nonbinding advisory actions, are nearly useless.
Not so, argues
"Votes that are below expectations create real change,"
"We were caught off guard a little bit," said
In response to the vote, the company instituted an extensive shareholder-outreach program where members of the board and later the company's executive-compensation committee met with shareholders representing about 38 percent of
"Those meetings drove certain changes to our compensation plan,"
"One of the main changes was to initiate this forward-looking, long-term incentive plan,"
The company instituted a three-year, long-term incentive plan that includes 10 separate performance metrics, including dividend growth.
The long-term incentive plan also is now based solely on the performance of the company.
Previously, there were individual performance criteria as well.
The company also made changes to its annual proxy report in an effort to make it more easily understood by shareholders and others.
Shareholders appeared to be pleased by the changes. At the 2014 annual meeting earlier this month, the compensation package was approved by 85 percent of shareholders.
"It's an advisory vote, so it's not binding, but it's like having disapproval from your parents,"
Though executive pay continues to rise,
"Those conversations occur on a daily basis now, and they influence the ultimate decisions and the ultimate levels people are getting paid,"
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