Annual meeting season is well under way. The results of shareholder votes at annual meetings are being tallied for many big public companies as we speak. Some companies ignore shareholder wishes that are clearly displayed in votes. Some boast supportive vote results when that just isn’t the reality.
Investors should really think about how shareholder rights are ignored or shrugged off at many public companies. When you’re a shareholder — and part owner — you are not supposed to be snubbed. Plus, there’s a reason they’re called “public companies.”
Like a bad neighbor
One of the most egregious examples of shareholder abuse occurred in 2011, when it came to light that Eugene Isenberg was set to receive a $100 million golden parachute after resigning from the CEO position, despite the fact that he wasn’t actually going anywhere. He would remain at the company as chairman of the board — he basically was set to get a chute without jumping out of the plane.
He later relinquished the payout, but governance problems have continued. Recently, for the third year straight, shareholders have voted down executive compensation policies with their say-on-pay votes.
Although say-on-pay votes are non-binding, they do represent shareholder opinion. They should be embarrassing for any corporate executive team and board with a sense of duty and honor.
Corporate governance expert Paul Hodgson recently detailed Nabors Industries Ltd. (NYSE:NBR)’ extreme shareholder unfriendliness. The outrages go even deeper than repeated smackdowns of unreasonable compensation policies, and also illustrate how companies can claim they’re improving corporate governance while avoiding any real substantive change.
Bread, circuses, and distractions
Reports from Wal-Mart Stores, Inc. (NYSE:WMT)‘s shareholder meeting just might be enough to make one sick. Actors Tom Cruise and Hugh Jackman appeared for the spectacle, which took place in a college stadium. According to an MSNBC report, the extravaganza included “a big dance number meant to showcase the global tapestry that is Wal-Mart Stores, Inc. (NYSE:WMT)’s workforce.”
Cruise’s speech lauded Wal-Mart Stores, Inc. (NYSE:WMT)’s recent work for women. In fact, the behemoth recently gave $3.5 million to the Red Cross for a training program through Wal-Mart Stores, Inc. (NYSE:WMT)’s Global Women’s Economic Empowerment initiative.I’ll grant some of Cruise’s points in his speech; indeed, due to the company’s size and influence, it can be a “role model for how business can address some of the biggest issues facing our world, in ways big and small.” But let’s insert some healthy skepticism; Cruise’s speech contains more than a touch of irony given alleged discrimination against women at the company.
This piece is about shareholder meetings, though, so let’s not get distracted by celebrities and song-and-dance routines. One of my Foolish colleagues, M. Joy Hayes, recently explained why “supportive” shareholder votes at Wal-Mart Stores, Inc. (NYSE:WMT) are smoke and mirrors.
The fact that the Walton family owns more than half the company’s shares has been an ongoing “more than meets the eye” factor — shareholder vote tallies can’t be taken at face value. It just goes to show what happens when it’s almost all in the family. So remember that negative shareholder votes are far more meaningful since they come from a minority group that’s not necessarily willing to give Wal-Mart Stores, Inc. (NYSE:WMT) carte blanche.
Shareholders shouldn’t “like” this