BNY Mellon shareholders vote to limit executive severance packages
Shareholders of Bank of New York Mellon Corp. adopted a proposal to rein in "golden parachutes" for executives Tuesday at the bank's annual meeting.
The resolution advises -- but does not require -- the board of directors to limit severance payments to less than three times an executive's salary plus bonus, unless approved by shareholders.
Experts say resolutions proposed by shareholders at annual meetings rarely get adopted if they don't have the support of management and the board. But shareholders, especially those owning stock in big banks, have been irked by executive bonuses that were paid during the financial crisis.
BNY Mellon's board had urged shareholders gathered at the meeting Downtown to vote against the proposal, as company boards usually do regarding proposals not their own.
"Shareholders' proposals don't get passed that often," said Gary Hewitt, spokesman for RiskMetrics Group, New York firm that analyzes proxy statements.
Even relatively popular proposals from shareholders fall short. Proposals related to golden parachutes were approved in 34 percent of the annual meetings where they were brought up, Hewitt said. Even with the public's anger over Wall Street bonuses last year, "say on pay" proposals garnered shareholder approval an average of 46 percent of the time.
The BNY Mellon resolution applies to future severance agreements, not ones already in place, said a shareholder representing Trowel Trades S&P Index fund, which submitted the proposal. The fund owns 34,711 shares of BNY Mellon.
In a statement supporting its proposal, Trowel Trades called severance agreements "excessive in light of the high levels of compensation" in corporate America.
BNY Mellon's board is reviewing its severance agreement policies, CEO Robert Kelly said at the meeting, held at the Omni William Penn Hotel.
Kelly received $14 million in total pay last year, about the same as in 2008, according to proxy materials. His salary of $1 million was about $6,000 higher than in 2008, and he did not receive a cash bonus in either year.
Kelly is entitled to as much as $81 million in severance payments -- including $33 million in cash -- under an agreement that expires in July.
Another matter of great shareholder interest, a dividend increase, is on hold, Kelly said. Regulators are being conservative about allowing banks to pay out more, and Kelly wants to log several quarters of healthy profits before raising the quarterly dividend. It was cut to 9 cents a share from 24 cents last April.
Two other BNY Mellon shareholder proposals failed to pass. One sought to prohibit executives from selling off stock awards in the first five years, in order to encouragement managing for the long term. Another proposal, for cumulative voting, would have let shareholders aggregate their votes behind one director candidate.Additional Information:
Signs of change
The Mellons are coming off the top of BNY Mellon Center on Saturday, along with the encircled M logo.
Before year-end, the signs of former Mellon Financial Corp. on the Downtown building will be replaced with the name of the merged bank, 'BNY Mellon,' along with its gold, silver and bronze logo.