Executive Compensation - Say on Pay

2010 – Bank of New York Mellon Corporation

 

 

RESOLVED - the stockholders of Bank of New York Mellon Corporation (“BONY/Mellon”) recommend that the board of directors adopt a policy requiring that the proxy statement for each annual meeting contain a proposal, submitted by and supported by Company Management, seeking an advisory vote of shareholders to ratify and approve the board Compensation’s Committee Report and the executive compensation policies and practices set forth in the Company’s Compensation Discussion and Analysis.

     

Supporting Statement: In our view, senior executive compensation at BONY/Mellon has not always been structured in ways that best serve stockholders’ interests.  For example, while stockholders were experiencing negative total shareholder return for 2008, former Executive Chairman Thomas Renyi received more than $15 million in reported compensation, including more than $12.5 million in option awards, despite being scheduled to retire.

     

We believe existing SEC rules and stock exchange listing standards do not provide shareholders with sufficient mechanisms for providing input to boards on senior executive compensation. In contrast, in the United Kingdom, public companies allow shareholders to cast a vote on the “directors’ remuneration report,” which discloses executive compensation. Such a vote isn’t binding, but gives shareholders a clear voice that could help shape senior executive compensation. A 2007 study of executive compensation in the U.K. before and after the adoption of the shareholder advisory vote there found that CEO cash and total compensation became more sensitive to negative operating performance after the vote’s adoption.  (Sudhakar Balachandran et al., “Solving the Executive Compensation Problem through Shareholder Votes?  Evidence from the U.K.” (Oct. 2007).)

     

Currently U.S. share exchange listing standards require shareholder approval of equity-based compensation plans; those plans, however, set general parameters and accord the compensation committee substantial discretion in making awards and establishing performance thresholds for a particular year.  Stockholders do not have any mechanism for providing ongoing feedback on the application of those general standards to individual pay packages.

 

Similarly, performance criteria submitted for stockholder approval to allow a company to deduct compensation in excess of $1 million are broad and do not constrain compensation committees in setting performance targets for particular senior executives.  Withholding votes from compensation committee members who are standing for reelection is a blunt and insufficient instrument for registering dissatisfaction with the way in which the committee has administered compensation plans and policies in the previous year.

     

Accordingly, we urge BONY/Mellon’s board to allow stockholders to express their opinion about senior executive compensation by establishing an annual referendum process.  The results of such a vote could provide BONY/Mellon with useful information about stockholders’ views on the company’s senior executive compensation, as reported each year, and would facilitate constructive dialogue between stockholders and the board.

     

We urge stockholders to vote for this proposal.