CHARLOTTE, N.C. - Wachovia Corp. shareholders want the right to sign off on any severance packages worth three times more than the departing executive's annual salary and bonus, according to a nonbinding proposal approved during the bank's annual meeting Tuesday.
About 57 percent of voting shareholders approved the proposal from the Trowel Trades Index Fund, a mutual fund that owns about 54,000 shares of Wachovia stock. The fund is administered by the International Union of Bricklayers and Allied Craftworkers.
"We're not terribly surprised," said Jake McIntyre, assistant to the union's secretary-treasurer. "Everyone in the institutional community supports reasonable restrictions on severance plans."
The move is part of a broader effort by labor union pension and investment funds to force limits on executive pay, benefits and severance packages. Unions representing carpenters, government workers, teamsters and electrical workers have also submitted shareholder resolutions to force limits at McDonald's, Bank of America and Duke Energy.
Wachovia CEO Ken Thompson told reporters following the meeting that the nation's fourth-largest bank holding company is "comfortable" with the restriction, despite opposing it.
The bank's concern, he said, is that "if we were acquiring somebody that had contracts above that, we wouldn't want that to be the reason that we failed to make a good acquisition."
Thompson earlier told shareholders that Wachovia's board of directors would take the proposal "into consideration if future agreements are contemplated." A spokeswoman declined to further explain how the company would address the resolution.
Shareholders rejected three other proposals, including one requiring that nominees for the board receive a majority of votes rather than a plurality.
Thompson told shareholders the bank is eyeing expansion through growth in existing international businesses, including real estate capital markets. Over the longer term, the bank is open to broader options.
"Over the next five or ten years, as consolidation occurs in the financial industry, it will be global," he said. "As it makes sense, we will look internationally to expand, but it will be done in a measured way."
He also said rising oil prices could effect the bank's performance over time.
"They certainly will have an impact if they persist because it basically takes money out of consumers' pockets," he said. "Over time, that's a tax on the consumer and it will reduce their buying power for other things. It will certainly make it more difficult for our consumer bank, but our consumer bank's doing a great job of executing right now and I've got a lot of confidence that that will continue."
Wachovia has reported four consecutive years of double-digit earnings growth and has seen its shares increase by 123 percent over the past five years, while its dividend has increased by 113 percent since the end of 2001, Thompson said.
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