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In three years of say-on-pay votes since Dodd-Frank, investors have widely acquiesced to double-digit increases in bank executive compensation.
May 9 -
The European trend to restrain CEO pay is gaining momentum in the U.S. It suggests the double-digit raises that American bank bosses have enjoyed the past few years may not last.
April 30
Eagle Bancorp (EGBN) is claiming that a proxy advisory firm made mathematical errors and used faulty reasoning when it urged the Bethesda, Md., company's shareholders to reject its executive compensation plan.
That recommendation by Institutional Shareholder Services, or ISS, may have prompted some of Eagle's shareholders to cast "no" votes in a
ISS included a 2011 bonus as part of Chief Executive Ronald Paul's 2012 total pay, Michael Flynn, Eagle's chief operating officer, said in an interview Friday. Federal securities law required Eagle to report the bonus as part of 2011 income, but ISS mistakenly included it in Paul's 2012 income.
The advisory firm also double-counted some items when it calculated Paul's total compensation for 2011 and 2012. As a result, ISS said that Paul's compensation increased in 2012 compared to a year earlier. However, his pay fell by 42% last year, to $1.9 million, based on numbers Eagle reported in its 2012 proxy statement.
"What really upsets me more than anything else, if anybody had spent 10 seconds looking at the proxy, they would see that [our] proxy numbers are different from the ISS numbers," Paul said in an interview. "ISS should have asked whey their numbers were different."
Eagle spoke with two large institutional investors, whom Paul declined to identify, before its annual meeting to point out the errors. As a result, the investors changed their say-on-pay votes from "no" to "yes," Paul said.
Eagle contacted ISS when it discovered the faulty reasoning and errors, but the firm said it would be unable to respond until late July, because it is busy with proxy season, Flynn said.
ISS did not respond to a request for comment.
Eagle is not considering litigation against ISS and it does not plan to seek a new vote on the measure. Rather, Paul said he wants ISS to be accurate when it makes recommendations. "It clearly sends the wrong message, based on inaccurate information," he said.
About 20% of shareholders rejected Eagle's executive compensation plans during last year's annual meeting. ISS also recommended that shareholders vote "no" on that measure, though Paul said he was unaware of errors in ISS's 2012 report.
