Blockbuster adopts 'say on pay' policy
EmptyNEW YORK -- Shareholders of Blockbuster will get a chance to voice their approval or disapproval of executive pay starting next year.
In what is believed to be a first for the broader entertainment industry, the video rental giant said Tuesday that its board has adopted a policy that will give shareholders a nonbinding advisory vote on compensation of top managers, commonly known as "say on pay," starting with the 2009 annual meeting. The votes will allow investors to review the annual pay packages for such Blockbuster brass as chairman and CEO James Keyes and CFO Thomas Casey.
The "say on pay" approach has been gaining traction in the U.S. as of late amid attempts by companies to strengthen their corporate governance practices, appear more shareholder-friendly and counter criticism of expensive pay packages.
Insurance company Aflac will hold its first "say on pay" advisory vote in May. A majority of Blockbuster shareholders spoke out last year in favor of the introduction of such a vote, as did Verizon Communications shareholders.
"To our knowledge, Blockbuster is one of the first to adopt this policy," a Blockbuster said. "We're not aware of anyone else in the entertainment industry who also has adopted it."
Keyes said the move "reinforces our commitment to implementing strong corporate governance practices and improving transparency with our shareholders."
Blockbuster said that its executive bonus and equity compensation is tied to the firm's financial and operating performance.
Analysts surveyed Tuesday do not expect the "say on pay" concept to become a widely accepted practice in the media and entertainment industry. One of them cited the dual-class voting structures of many big sector companies as a key reason.