Putting it to a vote…

October 28, 2005

Over the past few years, there’s been a growing number of shareholder proposals to allow investors some say on executive compensation. But many of the proposals never even make it onto the proxy because companies often claim that what they choose to pay their top executives is part of the company’s internal operations and shareholders shouldn’t have a say. After all, most companies claim, that’s what compensation committees and compensation consultants are for.

So imagine my surprise when I came across Escala’s (ESCL) proxy yesterday. The company’s board is actually putting a key component of the its top two executives’ compensation — incentive bonuses — up for a vote. Investors get a chance to vote on both new CEO Jose Miguel Herrero and former CEO Greg Manning’s annual performance bonus as well as the their “long-term incentive award”.

The only problem is that Escala, which changed its name last month from Greg Manning Auctions, isn’t exactly a household name. If a company like Coke (KO) or IBM (IBM) did something like this, people would pay attention. Still, if smaller companies like Escala can come to the conclusion that giving investors a say on some issues won’t bring down the company, there’s hope that one day the big guys will too.

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