Orrstown Financial Services said Tuesday that shareholders voted in support of management's compensation, though they also voted to eliminate supermajority voting.
Brad Everly, the Shippensburg, Pa., company's chief financial officer, said in an interview that 71.5% of voting shares in the closely watched vote backed pay packages under a say on pay vote.
Shareholders at several banking companies, including Citigroup (NYSE: C) and First Merit (FMER) have rejected pay. While Orrstown escaped the nonbinding vote, Glass Lewis has said that a say on pay approval of less than 75% is a cause for concern.
Institutional Shareholder Services had urged shareholder to reject the pay structure at the $1.4 billion-asset Orrstown. ISS expressed concern with the pay practices and shareholders' rights, even though the board cut the pay of Thomas Quinn, Orrstown's president and CEO, because of a lagging stock price. ISS said Quinn's compensation is still not properly aligned with the company's performance.
ISS also wants Orrstown to require Quinn to hold more company stock. "Quinn currently holds just over $50,000 worth of company stock, and another 6,000 deeply underwater options," ISS wrote in an April 11 report.
Separately, Everly said that 52.4% of voting shares broke with the board and approved a proposal from Gerald Armstrong to require a simple majority for backing proposals that require shareholder approval. In a number of cases, the company has required a supermajority of 75% to approve changes to the bylaws.
"The issue goes back to our board to decide what they want to do with" the shareholder proposal, Everly said. "The expectation is that they would simply replace the verbiage [in the bylaws] with a simple majority."