Stephen Silberstein is fed up with elite complacency, corporate fat cats and self-dealing. And he's threatening to make himself heard at the ballot box.
Silberstein knows a thing or two about fat cats. He amassed a fortune as the co-founder of Innovative Interfaces, a developer of library software for services including cataloguing and circulation. Now he's deploying a trust he owns in an attempt to prod BlackRock to vote no on big executive pay packages. He's among a growing number of investors and nonprofit groups pressuring fund managers to keep a closer eye on how companies pay top executives and influence politics.
"There's momentum here," said Silberstein, 73, who likens his campaign to the abolitionist movement and has given more than $1 million to Hillary Clinton since she first ran for office in 2000 in a bid for a US Senate seat from New York.
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"You have every presidential candidate, from Donald Trump to Bernie Sanders to Hillary, talking about this excess CEO pay," he said. "Four years ago, you didn't have these kinds of conversations in the presidential campaign."
The retired entrepreneur's trust holds stakes in companies through funds managed by BlackRock, which votes his shares. The $4.7 trillion asset manager doesn't vote the way Silberstein would, he says, so he's seizing this populist moment to change that. His proposal, up for vote at BlackRock's May 25 annual meeting, asks the fund manager to reconsider how it evaluates and votes on executive-pay plans. SumOfUs, a New York-based nonprofit that advocates on behalf of consumers, has collected 74,500 signatures in support of Silberstein's resolution.
BlackRock and Vanguard Group, which manages $3.3 trillion, are among the largest shareholders at most big U.S. companies. Both say they most effectively exercise influence through private meetings with corporate directors.
Still, they vote with boards on executive pay 97 per cent of the time, according to As You Sow, an advocacy group that has received financial support from Silberstein. That record conflicts with popular sentiment. About 74 per cent of those surveyed in a nationwide poll in February don't believe chief executive officers are paid appropriately relative to workers, and 62 per cent say there should be caps on their pay. The survey, conducted by Stanford University's Rock Center for Corporate Governance, found those views are held across the political spectrum, and despite respondents underestimating how much CEOs actually earn.
While so-called say-on-pay votes are advisory and nonbinding, meaning companies don't need to change their practices even if investors disapprove, boards tend to bristle if investors appear unhappy and often make changes to placate them.
"Most people aren't direct shareholders in these companies, but many people are shareholders through their pension funds or mutual funds, so there definitely is a piece around educating people that they can have a say that way," said Liz McDowell, campaign director at SumOfUs.
Vanguard became the target of a campaign in November that included 65,000 e-mails asking it to change how it votes on resolutions calling for disclosure of corporate political spending. Neither Vanguard nor BlackRock voted in favour of any such proposals in 2014 or 2015, according to the Washington-based Center for Political Accountability.
