Restless stockholders at Hartford, Williams Cos. …

May 27, 2010

It’s the slow season here at the footnoted global campus: Filings are coming in at a trickle compared to the flood we saw in April and early May. Many of the ones we’re seeing are the results of recent annual meetings.

Cablevision aside, these tend to be dull affairs: Uncontested incumbents are re-elected, vague executive incentive plans are adopted, auditors are rehired, and shareholder proposals are shot down — from greenhouse gas emissions at coal company Massey Energy (MEE) to bird welfare at BJ’s Wholesale Club (BJ).

Once in a while, however, there’s a little excitement on the stockholder proposal front, and that’s what we saw earlier this week — with very different outcomes — at both Williams Cos. (WMB) and Hartford Financial Services (HIG).

At Williams Cos., shareholders passed a “say on pay” proposal — akin to one of the measures in pending congressional regulatory-reform legislation — despite stern opposition from the board and management. The final vote was 224.8 million share for, and 201.5 million shares against, or 53% to 47%, according to one of the 8-Ks the company filed yesterday. (The Tulsa World Herald got the scoop on the day of the actual meeting last week.)

The proposal, published in the April 8 proxy, was pretty straightforward:

“That the shareholders of THE WILLIAMS COMPANIES request its Board of Directors to adopt a policy that provides shareholders the opportunity at each annual meeting to vote on an advisory resolution, prepared by management, to ratify the compensation of the named-executive officers listed in the proxy statement’s Summary Compensation Table. “

It wouldn’t, the sponsor stressed up high, “affect any compensation paid or awarded any named-executive officer.” Gerald Roberts, the sponsor identified by the World Herald, who has campaigned for similar proposals for years, explained his motivation there:

“As a shareholder, I am concerned about the levels of compensation afforded our top management and members of the board of directors, who are to be independent, when the dividend seems frozen for the last two years.”

For the record, total compensation for Chairman and Chief Executive Steven J. Malcolm for last year was $9.5 million, according to the proxy’s summary compensation table.

No word from Williams Cos. on implementation, but one can imagine the board wasn’t pleased, given its invective against the original proposal. It called the proposal unnecessary and misleading, and said primly (echoing just about every other corporate rebuttal to a pay proposal that we’ve seen) that

“The Board has carefully considered this stockholder proposal and believes that the proposal is both not necessary and not in the best interests of our stockholders — [in part] because of the strong linkage between pay and performance that currently exists within our pay programs — Our pay program is structured to motivate and drive performance, emphasize long-term performance, and align our NEOs— interests with those of long-term stockholders.”

Mind you, it’s not as if Williams Cos. shareholders were in a full-on, throw-the-bums-out revolt: The three directors on the ballot each received at least 97% of the vote, amendments to the 2007 incentive plan were approved 329 million to 35.3 million, and a proposal requesting an environmental report on some gas exploration and production business was shot down 149 million for vs. 207 million against.

Over at Hartford, meantime, another modest proposal failed, but the nays only squeaked past the yeas by a relatively slim margin: 164.5 million against vs. 152 million for, according to the 8-K it filed on Tuesday. That’s a good bit short of the 222 million it would have needed to pass (a majority of outstanding shares), but interesting nonetheless, because the proposal — from the pension plan of the big public-workers union, the American Federation of State, County and Municipal Employees — would have required the company to change its bylaws and “allow for the reimbursement of certain proxy expenses incurred in connection with a stockholder proposed director nomination.”

It would have covered proxy efforts fielding a partial slate of directors as long as at least one won a seat and the move wasn’t meant to take over the board, according to the proposal Hartford’s proxy. AFSCME added:

“In our opinion, the power of stockholders to elect directors is the most important mechanism for ensuring that corporations are managed in stockholders’ interests. — The safety valve is ineffective, however, unless there is a meaningful threat of director replacement.”

Hartford opposed it in part on the grounds that the SEC was already proposing rules that would give shareholders proxy access in certain circumstances. But really, it just didn’t like the idea:

“The AFSCME proposal would encourage an increase in contested elections, which would result in increased distraction of management from the Company’s ordinary business and could result in increased costs to the Company and its shareholders, with no showing that it is needed. “

Management and the board won the day, of course. But the strong showing by AFSCME’s supporters may lead them to perk up and take note.

Image source: Mike Licht, NotionsCapital.com via Flickr

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