In the boardroom: Pushing the Pay Envelope: Shareholder Want Want

A California bank shareholder has been pushing the hot issue of performance-based pay for directors to something approaching its logical conclusion: He says they should get stock only, with no cash and no benefits.

Last year Emil Rossi, who owns a hardware store and among other things 400 shares of San Rafael-based Westamerica Bancorp., won 11% support for his proposal. This year he's making it again, for the fourth year running.

Mr. Rossi has introduced similar proposals at BankAmerica Corp. and several nonfinancial companies this year.

Many banks, imitating nonfinancial companies, have voluntarily made stock options and deferred compensation part of director pay.

And at other banks, shareholders like Mr. Rossi are increasingly speaking for stock compensation and introducing proposals to force changes.

Westamerica's management and directors own 7.44% of its stock. Only David Payne, who is chairman, CEO, and president, owns more than 1% of the $2.5 billion-asset company's stock.

Last year Westamerica paid each director except Mr. Payne a $14,000 retainer plus $1,000 for each board meeting attended. Mr. Payne, as an employee, received neither.

Westamerica officials said paying directors in stock wouldn't make them more focused on enhancing shareholder value.

"We don't see a reason" to change the compensation system, Mr. Payne said. "We don't honestly think it would change the way the board looks at its objectives.

The annual shareholder meeting is scheduled for April 22.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER