US shareholders 'becoming willing to say no on executive pay'

Shareholders in the US are becoming increasingly confident about voting against executive pay packages that are seen as excessive.

This is according to industry expert and author Nell Minow co-founder and director of governance risk assessment firm GMI Ratings, who told Bloomberg that shareholders said no to pay deals at around 50 of the more than 3,000 companies holding votes this year.

She also cited figures from Davis Polk showing a decline in the number of pay plans that won more than 80 per cent approval between 2011 and 2012.

This trend is emerging for a number of reasons, such as the fact that excessive pay is now seen as a sign of misalignment between executives' and shareholders' interests, as well as a negative indicator of the effectiveness of a board's independent oversight.

"If directors can't say no to the chief executive officer on pay, they probably can't say no to poorly designed strategy or head off operational fiascos," Ms Minow explained.

Last month, a report from the New York Times and Equilar showed that median salaries among the nation's 200 top-paid chief executives have risen by five per cent this year.