Executive compensation is clearly an issue that will dominate the 2007 proxy season for public companies. Today, a group of institutional investors - comprised of public pension funds, labor funds, asset managers, and foundations - announced a campaign to petition U.S. corporations to give corporate shareholders an advisory vote on executive compensation packages. The group, which was organized by American Federation of State, County and Municipal employees' (AFSCME) Employees Pension Plan and Walden Asset Management, said that it has filed shareholder resolutions at 44 public companies in the United States.

The group of investors are seeking an annual, non-binding advisory vote on the summary compensation table that every corporate board presents to investors in its yearly proxy statement. According to the group, these resolution were only submitted at companies where pay has been excessive or where there has been a misalignment between pay and performance over the past three to five years. Their target companies include the likes of Affiliated Computer Services, Citigroup, Coca-Cola, Exxon Mobil, Home Depot, Jones Apparel, Merck, Nabors, Pfizer, Qwest, Time Warner, UnitedHealth, and Wal-Mart.

The idea is good in theory, but will it work? The group is quick to note that similar resolutions were filed with a half-dozen other companies in 2006 and averaged more than 40 percent support in its first year, including 44 percent support at Sun Microsystems and Countrywide Financial, 43 percent support at Sara Lee, 41 percent at US Bancorp, and 40 percent at Home Depot. Moreover, the group points out that the strategy has already been successfully implemented overseas. The United Kingdom passed a law in 2002 requiring publicly traded companies to give shareholders an up-or-down advisory vote on executive pay, and the U.K. system has successfully restrained the growth rate of CEO compensation there ever since.

Whether or not this plan will work remains to be seen - the vast majority of shareholder resolutions will be voted upon this spring during 2007 stockholder meetings. Until then, investors wishing to learn more about executive compensation and how it relates to a company's performance can visit ExecutiveDisclosure.com, which includes free charts comparing compensation vs. performance, compensation vs. industry compensation, and much more!