‘Say on pay’ falls short with Rockwell Collins shareholders

A proposal to give shareholders “say on pay” failed to win passage at Rockwell Collins annual meeting Tuesday, despite a strong showing.

The resolution would have given shareholders an annual advisory vote to ratify the compensation of the company's top executive officers. While the board of directors wouldn't have been required to act on the shareholders' advice, a lopsided vote against compensation practices could have sent a pointed message.

The resolution was introduced to shareholders by Sister Peggy Nolan of Dubuque, a non-shareholder, on behalf of the Fried Family Trust of Solomons, Md., which owns 368 shares of Rockwell Collins stock. It was opposed by the Rockwell Collins board of directors.

In a statement to shareholders, the board said an advisory vote is not necessary because shareholders already are able to communicate with board members in writing if they disagree with executive compensation. It said the advisory vote “would not provide the Compensation Committee with meaningful insight into specific shareholder concerns” on executive pay.

Nolan said directors in practice often align themselves with management on issues of compensation, and that management interests are not always aligned with those of shareholders.

“We believe an actual vote is a much clearer message than say, a letter to the board,” said Nolan, who represented the Fried family on behalf of Clean Yield Asset Management, a shareholder rights group.

With most of the votes counted, a total of 63.8 million shares were voted against the shareholder referendum, while 51.8 million shares were voted for it.

An unrelated measure to amend the company's 2006 long-term incentive plan was passed by a margin of 101.9 million shares to 14.4 million shares. The changes include boosting the award limit to any single participant to an annual average during three consecutive shears of 1 million shares, up from 600,000 shares.

Rockwell Collins' 2009 fiscal year was not a high water mark for executive compensation, due in part to lower profits in a weakened aerospace economy.

The proxy reported that chairman, president and CEO Clay Jones received total compensation of $7.38 million. That was up from $6.52 million in fiscal 2008, but down from a peak of $8.1 million.

The base salary of Jones as top executive was down to $966,154 from $1,001,538, and his long-term incentives wee down almost half to just over $1 million.

Compensation was down in fiscal 2009 from fiscal 2008 for the two top executives who were employed in the same positions in that year.

Nolan said after the meeting that she was encouraged by the strong show of support.

“It shows quite a high level of interest by Rockwell Collins shareholders,” Nolan said. “I hope it would raise the board's awareness.”