The United Brotherhood of Carpenters has withdrawn 18 proposals urging companies to hold triennial advisory votes on executive compensation.
As originally reported by RiskMetrics Group, UBC had filed 20 proposals. Two were successfully challenged by companies at the Securities and Exchange Commission.
The move follows the House of Representatives' approval on July 30 of legislation that would require public companies to hold annual "say on pay" votes.
"We're pretty confident the Senate will deal with this issue in some form or fashion shortly," Ed Durkin, Director of Corporate Affairs tells Compliance Week. "In light of that, we decided it wouldn't be constructive to subject these companies to a vote. We thought it would be more prudent to focus our time and energy on the legislative process."
The proposal floated by the union would apply only to large-cap companies, such as the Russell 1000. In addition to an overall yes or no advisory vote every three years, shareholders would also register their approval or disapproval on annual and long-term incentive plans and post-employment pay.
Durkin says most of the companies UBC spoke with "generally liked the [triennial] formulation versus an annual say on pay."
"Most companies engaged in good dialogue, and some indicated a willingness to speak in favor of the idea in the legislative forum if the concept of triennial votes gains traction," he says.
All TARP companies have to provide advisory votes as required by the American Recovery and Reinvestment Act. Durkin says UBC has roughly 170 of those companies in its portfolio.
If the universe of companies that hold annual votes is expanded to include all publicly traded companies, he says, "It will be a mindless process."
Durkin says a triennial vote would make say on pay a more meaningful process by having a more nuanced vote at fewer companies.
Most management advisory vote proposals received wide support in 2009, according to Rosanna Landis Weaver of RiskMetrics Group's Compensation Research Team, who first reported the withdrawals.
For 141 companies for which RiskMetrics has vote data, Weaver says an average of 88 percent of votes were cast in support of the management resolutions.
Durkin says voting support for management SOP proposals at 30 large TARP companies was even higher, averaging 95 percent.
Meanwhile, Weaver says the average voting support for shareholder say-on-pay proposals was 45.4 percent in favor among 69 companies as of Sept. 1.