The 'say-on-pay' proposals to give share owners a greater voice in setting executive pay have been the hottest issue on company proxy ballots this year, but investors have sent mixed signals on whether they like the idea.

Activist share owners have won a few victories in their push to give public company stockholders an advisory vote on the pay of top executives.

But the proposals have failed at many companies, including a closely watched vote at Countrywide Financial Corp's annual meeting on Wednesday.

Proponents say the concept, which is new to the United States but is widely adopted at British companies, is gaining momentum.

Last year, none of the proposals appearing on U.S. shareholder ballots won enough votes to pass, but they did get significant support.

Some governance experts, though, say that after such a strong showing last year, they had expected the proposals would have done much better this year.

"What surprises me is that after they were introduced last year and got such high average support, they weren't more successful this year," said Shirley Westcott, managing director of policy at shareholder advisory firm Proxy Governance, which has supported the say-on-pay proposals at some but not all companies.

At Countywide, the proposal won support of 31.7 per cent of votes cast, less than last year.

The company's chief executive, Angelo Mozilo, has been a frequent target of shareholder critics who argue he is overpaid.

His compensation totaled nearly US$43 million in 2006, according to data in Countrywide's annual proxy filing. He also had US$78.9 million of gains from stock options and the vesting of shares.

Similar say-on-pay proposals have passed this year at Ingersoll-Rand Company Limited, Blockbuster, Motorola, and Verizon Communications.

SENDING A MESSAGE

Even where the measures have failed this year, proponents say, they typically have gotten a lot of support and have sent a strong message to management at the companies.

The measure "has been embraced by institutional shareholders with astonishing speed," said Richard Ferlauto, director of pension and benefit policy at the American Federation of State, County and Municipal Employees, the sponsor of many of the proposals and a frequent critic of executive compensation.

Ferlauto said he expects some companies to voluntarily adopt some kind of advisory vote on executive pay after this year's annual meeting season.

He is part of a working group, including more than a dozen U.S. companies such as Pfizer, American International Group and Colgate-Palmolive Company, that is studying the issue.

Already, one company has adopted the say-on-pay concept voluntarily.

Disability insurer Aflac said in February it would give shareholders a nonbinding vote on pay for top executives, starting in 2009.

The U.S. House of Representatives in April approved a measure to give shareholders a nonbinding vote on executive pay, while Illinois Democratic Senator Barack Obama, a 2008 presidential hopeful, has offered a companion bill in the Senate.

- Reuters

TAKEN FROM THE FINANCIAL GLEANER, FRIDAY, JUNE 15, 2007