rickyp wrote:b They can't, for instance call shareholders meetings to challenge executive copmpensation.

Except under Dodd-Frank, executive compensation must be approved by a nonbinding vote of the shareholders. So far, only 21 companies have voted against them. http://www.usatoday.com/money/perfi/col ... -pay_n.htm

How would that be a 'nonbinding' vote?

Oh, and how many times are members of the board included in the bonuses?

danivon wrote:How would that be a 'nonbinding' vote?

Oh, and how many times are members of the board included in the bonuses?

They are non-binding in that the Board does not have to follow the vote of the shareholders, i.e. they can decide to pay the rejected compensation anyway.

Not sure of the answer on the second question.

They are non-binding in that the Board does not have to follow the vote of the shareholders, i.e. they can decide to pay the rejected compensation anyway.

What's the point of the vote then? The Board, generally appointed by the excutive, can act with impunity.
The shareholders might as well write strongly worded letters to the Times.

rickyp wrote:What's the point of the vote then? The Board, generally appointed by the excutive, can act with impunity.

Uhm, no the Board members are elected by the shareholders. If the shareholders ignore the vote, the shareholders can vote them out. Since most major corporation Board membership comes with a salary, they stand to lose a significant income if this does happen.

arch

Uhm, no the Board members are elected by the shareholders

Normally a slate of Board Members are nominated by the executive and put forward as the board.
It is very unusal, and very difficult, for shareholders to "revolt" and elect their own board.
And the shareholders often only confirm appointments that have been in affect for a while. When board slots open or are added they are often appointed until such time as they can be confirmed at the General meetings.
Theoretically shareholders can do all kinds of things at annual general meetings. However, in practice General meetings are usually timid affairs. Shareholders have a difficutl time attending due to locale sometimes. And few dissenters to a board and executive have the ability to both know and to communicate directly and effectively with a majority of shareholders . Pllus they are usually only annual events. One oportunity a year to express and weild the power that theior shares provide them (votes)
At the GA itself the agenda is set by the chair and opportunities within the agenda for expressions from the floor are limited. So, although occasionally the odd gadfly or representative of institutional investors makes a scene ... a disciplined board and executive can weather the uncomfortable few minutes and carry on regardless.
Corporations are not particularly democratic and boards have been remarkably ineffective in governing their companies. The only time yuou see corporate regulations affecting change is when there is disagreeement amongst the largest shareholders, who hold significant enough percentages of the voting shares. The average investor, even the average insititutional investor, is generally muted.

And, of course, the board often includes people who are holders of significant equity. For example, the Murdochs do not own over 50% of News International, but they do control a large minority and so only have to persuade a small number of the remainder to support them. That is an extreme example, of coiurse.