Many Banks — But Not All — Prevail in 'Say on Pay' Votes

Shareholders voiced their displeasure with executive compensation policies at two regional Ohio banks last week, but managers at a host of other institutions have had better luck.

Last week, FirstMerit (FMER) shareholders rejected the Akron, Ohio, company's compensation policy, with only 46% of shareholders casting votes in favor of the proposal, according to a Monday filing with the Securities and Exchange Commission. So-called say on pay votes are non-binding, but at some other banking companies where the proposals were rejected, directors and management have said they take the votes seriously.

Meanwhile, just 61% of shareholders at Huntington Bancshares (HBAN) approved its compensation plan last Thursday. The Columbus, Ohio, company disclosed the results Tuesday in an SEC filing.

Proxy advisory firm Institutional Shareholder Services has said that any vote with approval levels under 70% is a poor response and merits attention from company management. Glass Lewis, another proxy advisory firm, has said the threshold is 75%. Both ISS and Glass Lewis had recommended that shareholders vote against the pay plans at FirstMerit and Huntington.

A majority of investors had already rejected the compensation plan of Citigroup (NYSE: C), which also held its annual meeting last week. Some observers have expected shareholders to be more willing to voice their displeasure with executive compensation plans at this year's annual meetings.

Other banking companies had more positive responses to their say-on-pay proposals, with votes cast at more than a dozen annual meetings on Tuesday.

Among the highlights, BB&T (BBT) shareholders soundly supported compensation for Kelly King, the company's chairman and CEO, and his management team. More than 96% of the votes cast at this year's annual meeting in Winston-Salem, N.C., supported the existing executive compensation. Shareholders also rejected a pair of outside proposals, including one that would have implemented majority voting for directors.

"We have had a very conservative approach to compensation," King said in an interview after the meeting, which was sparsely attended and yielded no tense or acrimonious moments. "I personally have a farm ethic. I want to earn every dime that I get."

PNC Financial Services Group (PNC) shareholders approved its say-on-pay proposal on Tuesday, though the Pittsburgh company had not filed official results as of Tuesday afternoon.