US - The US$225bn CalPERS accused the Shaw Group board of approving "egregious" severance packages, and has rallied the top 5000 company shareholders to back a proposal to counter excessive shareholder compensation.
The CalPERS proposal would require shareholder ratification of any severance packages worth more than 2.99 times an officer’s salary and target bonus.
CalPERS' criticism of Shaw Groups compensation comes as the engineering and construction company announced it had lost US$20.3m for the three months ending November 30.
“Historically, the Shaw Group Compensation Committee approved some of the most egregious severance and change-of-control provisions ever to catch the attention of CalPERS,” said CalPERS senior investment officer Christianna Wood.
"We are not seeking to limit severance payouts, but we do believe that shareowners should have the ability to approve certain large payouts.”
CalPERS said the company CEO’s recent offer to reduce the term of his severance contract from 10 years to 3 years was “a positive event”, but applied only to one individual and falls short of “a formal change in compensation policy that cannot be reversed” for all senior executives.
Should Shaw Group adopt the proposal, it would still have the flexibility needed to attract qualified individuals to serve to the company, said CalPERS.
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The ITN Limited Pension Scheme has named Trafalgar House as its administrator for an initial term of five years.