COLUMBUS, GA – Boston Common Asset Management attended the annual meeting of Aflac shareholders in Columbus, Georgia today. The socially responsible investment group addressed Aflac’s CEO and Board of Directors in a public statement of support for the company’s commitment to institute an advisory vote on executive compensation.
As the result of a successful dialogue led by Boston Common, insurer Aflac committed in February to become the first U.S. company to empower shareholders to approve or disapprove of a company’s executive compensation practices through an advisory vote. Aflac’s groundbreaking decision means shareholders will cast non-binding ‘yes’ or ‘no’ votes on the company’s executive compensation report starting in 2009.
“Giving shareholders a ‘say on pay’ reinforces a fundamental relationship that many of today’s executives seem to have forgotten—that shareholders own the company”, said Dawn Wolfe, a social research analyst at Boston Common who attended the meeting at Aflac headquarters. “Aflac’s decision to implement an advisory vote on executive compensation sends a strong signal to us as shareholders that Aflac’s management has not forgotten who owns the company,” Wolfe continued.
Boston Common expects the advisory vote will improve communication between investors and directors, encourage pay-for-performance practices, and act as a counterweight to unwarranted upward pressure on compensation for executives. Boston Common routinely votes on executive compensation packages in the U.K., Australia, Sweden, and the Netherlands, where advisory votes are required. In these overseas markets, shareholder votes have been found to strengthen pay-for-performance linkages and improve board accountability.
Given an overall concern with the decoupling of pay from performance and the widening gap between CEO compensation and that of the average U.S. worker, Boston Common will continue advocating for say-on-pay reform at other companies in clients’ portfolios.
