Several years ago, the pension plan of the Utility Workers Union of America proposed that shareholders change the corporate bylaws of Dominion Resources, Inc., so that in the future management had to get shareholder approval of executive pay exceeding $1 million, as well as detailed information about the firm’s executive incentive plans. The union pointed out that, usually, under IRS regulations, corporations can’t deduct more than $1 million in pay for any of a company’s top five paid executives. Under the new rules the Utility Workers Union is pushing, boards of directors will no longer be able to approve executive pay above $1 million; instead, shareholders would have to vote on it. In terms of effectively running a company, what do you think are the pros and cons of the union’s recommendations? Would you vote for or against the union’s recommendation? Why?
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