The plucky duck

Imagine shareholders having a chance to decide about executive compensation packages.

The Aflac insurance company seems to be doing quite well with its ubiquitous plucky duck keeping the name before the public with all those clever television commercials. Now the company may be doing the public an even greater favor with its proposal for a new executive compensation program.

How’s this for innovation: The firm’s shareholders soon will be able to vote on the pay for top executives.

Responding to the growing uproar about obscene and soaring pay and benefits for American corporations, Aflac has announced it will become the first major U.S. company to let shareholders vote on those packages. A non-binding vote will begin in 2009 and, as of now, directors will have the option of going against such a vote. Look for binding proposals in the future. At last somebody seems to understand people are angry over those $40 million and even $50 million bundles so many executives have been squirreling away to the detriment of the firms and the stockholders they supposedly serve. Perhaps the days of the golden parachute are fading, we hope.

Additional support may be on the way. Shareholder proposals to approve executive pay are on ballots this year for some 50 firms. Many have been introduced by the American Federation of State, County and Municipal Employees Union, which does a lot of institutional investing.

Boards of directors for U.S. companies have become notorious for their padding of pay and retirement packages for executives. It’s often a mutual back-scratching deal: Executives make sure directors get nifty compensation for their limited time on the job, then the directors reciprocate with boosted pay and goodies for the executives. Shareholders feel powerless even though they are distressed by such sweetheart deals.

CEO Don Amos of Aflac seems comfortable with the new approach and said the plan will force companies to more closely align pay with performance. He owns 9 percent of Aflac stock. He made $3.7 million in salary and bonus plus $2.5 million in restricted stock in 2005, the most recent year reported. The package was second highest among a group of 16 insurance CEOs. Aflac stock has been a bit flat of late and the 2009 package recommended by the shareholders for Amos might reflect that. But that’s fine with Amos and a number of other topflight CEOs across the country.

Almost everyone, particularly stockholders in various firms, are perturbed by stories about outlandish pay handouts, sometimes for executives of failed companies like Enron. Aflac shareholders could be ecstatic about the chance to vote on such issues and we can only hope more companies adopt the Aflac plan.

The stock-buying public has been fleeced and flummoxed by wheeler-dealers long enough.