Companies that load executives up with stock options, and in some cases lower their price, can dilute the values of investments that already are suffering from falling stock prices.
Executive compensation is important to a growing number of shareholders.
Connecticut, known as an activist investor in the early 1990s, has put forward proposals regarding executive pay and other corporate governance issues for votes at annual meetings of three companies, Nappier said. Connecticut's pension fund already has won changes at Healthsouth Corp., which has agreed to revise its options policy to try to limit dilution on other shareholders, and Autodesk Inc., which agreed not to reprice employee stock options if they fall out of the money, Nappier said. Above-Market Options Options, which give the recipient the right to buy shares for a set price over a period of time, now are typically set at the market price of shares. The Healthsouth program calls for a quarter of future executive stock option grants to carry some extra performance incentives, such as an above-market exercise price, according to Nappier. The New York City Employee Retirement System said it is pushing for a similar arrangement at Conseco, which last year granted new Chief Executive Gary Wendt options to buy 10 million shares of the Indianapolis-based insurer.