Release Date: Apr 14, 2004
New York, NY At today's annual meeting, United Technologies (NYSE:UTX) shareholders cast a majority of their votes in favor of a proposal asking that a significant portion of any future stock option grants to top executives be performance-based. The measure passed with 56% of the yes-and-no votes. Amalgamated Bank's LongView Collective Investment Fund filed the proposal in an effort to establish a policy that would connect long-term executive pay to transparent measures of company performance.
Last year, United Technologies' CEO and Chairman George David received 325,000 stock options valued at $10 million*. The options were awarded on top of his compensation of $4 million in salary and cash bonus.
The UTX board's compensation committee reported in the 2004 proxy statement that long-term compensation was targeted "within the quartile above the median for senior executives," and that "the combination of base salary and bonus placed David within the quartile above the median" of the company's designated compensation peer group.
"The target should not be an 'above the median' paycheck," said Amalgamated Bank's Chief Economist Melissa Moye. "A majority of investors believe the bar should be set so that stock option payouts are triggered only with share value out-performance."
The proposal defined three types of metrics for performance-based stock options:
- Indexed options with an exercise price linked to an industry index.
- Premium-priced stock options, where the exercise price would be set above the market price on the grant date.
- Performance-vesting options that vest when the market price of the stock exceeds a specific target.
Another shareholder proposal that garnered a high vote called for the independence of the chairman of the board. This proposal, presented by the Trowel Trades S&P 500 Index Fund, received 39% of the yes-and-no votes cast.
Since these two proposals received substantial numbers of votes in favor of the reforms, Chairman David announced that the board will review these matters and report next year.
The LongView Funds hold a total of 238,000 United Technologies shares.
Founded in 1923, Amalgamated Bank invests workers' retirement savings through its LongView Funds. With $8 billion in assets under management, LongView is one of the most active corporate governance advocates in the market. Amalgamated Bank can be found online at www.amalgamatedonline.com.
