Analysis Of Shareholder Binding Vote Rule - 1235 Words

Introduction Shareholders finally ended a decade of advisory vote for pay on executive pay of directors after a new Enterprise and Regulatory Reform Act published in 2013. (Orsagh, 2013) The new policy promulgated should be possible to set off an enormous impact for all types of people, especially the shareholders. However, the fact is quite unsatisfactory. In this essay, the analysis of shareholder binding vote rule will be divided into two sections in the main body, one is focus on the effects and benefits from binding vote and another one is describe the useless binding vote and it problem. A brief overview of background of corporate governance will be introduced first. Main Body a) Background of Corporate Governance Corporate†¦show more content†¦Moreover, one of the key futures of Britain best practice has been changed. The executive remuneration of directors will deeply influenced by the votes of shareholders, that the rights of the shareholders have become powerful. b) The effects and benefits from binding vote As regard as shareholders have binding vote for executive compensation, the whole process of conference on executive compensation becomes more transparent. Since the transparency of special payments for non performance will be increase that shareholders will reduce the expectation for surprises (Wilson, as cited by BBC News, 2013). Exten-Wright (2012) emphasizes that the rights of shareholders for the remuneration process are useful to sanction the unfairly compensation policies. In addition, shareholders can avoid using reject the re-election for directors or any other extreme way to express the criticism about compensation structure by using a targeted program. Aviva event (Treanor and Kollewe, 2012) is a typical case which shareholders used tough attitude through high percentages, with 54% against votes, to vetoing the reappointment of directors before binding vote term published. Shareholders unexpectedly abstain from a large number of voting, which nearly 60 per cent, to boycott Aviva s chief executive, Andrew Moss. The irritant approach will make shareholders to obtain a