Shareholders at Goodyear Tire & Rubber gave majority support to a new shareholder proposal that asks the board to limit the types of pay that can be included in the calculation of supplemental retirement benefits for senior executives.

United Brotherhood of Carpenters & Joiners of America reported that its proposal won 51.6 percent of the votes cast at the company's April 10 meeting. The resolution urges the company to consider only an executive's base annual salary when determining his or her supplemental executive retirement plan (SERP) benefits and to exclude bonuses or incentive payments from the total pay considered.

"It's the first vote we've had on the substantive issue of taking some of the money off the table as far as how these plans are calculated," said Ed Durkin, the Carpenters' director of corporate affairs.

SERPs are retirement benefits given to executives in addition to regular qualified pension plans. SERP payments do not receive the same tax deductions as a qualified pension plan, and most companies pay the difference in tax obligations to provide the supplemental benefits to the executive. Unlike defined contribution pension plans, SERPs often incorporate bonus and incentive payments as well as annual base salary.

Also, SERPs usually mean fixed payments to an executive for life independent of company income or stock performance, according to a 2004 book on executive pay practices by Lucian Bebchuk, a Harvard University law professor, and Jesse Fried, a law professor at the University of California at Berkeley.

The Carpenters crafted the proposal in response to concerns about "excessive pension benefits" awarded to executives. According to the union's supporting statement in Goodyear's 2007 proxy, the 2006 pension and SERP package given to CEO Robert Keegan was calculated based on a total pay of over $4 million, including bonuses and incentives.

The 51.6 percent "for" vote at Goodyear is high for a first-time proposal that was opposed by management, which argued it would decrease the company's competitiveness by driving away potential executives. In 2006, a first-year resolution seeking an advisory vote on compensation--"say on pay"-- averaged 40 percent support at seven firms. Last month, a new proxy access proposal won 43 percent support at Hewlett-Packard.

In past years, SERP-related proposals have asked for a shareholder vote on the company's policy or for additional disclosure. This season marks the first year that a proposal asks for a limit on the types of pay that may be included in SERP calculations.

So far, the Carpenters have filed more than 15 SERP proposals. Four have been withdrawn, including one at American Express, where Durkin said management agreed to limit the bonus component to an amount equaling the annual salary when calculating SERPs. Ten proposals are still pending through June at firms like AT&T, Johnson & Johnson, and Eastman Chemical.

About four other resolutions seeking shareholder approval of SERPs have been filed by the AFL-CIO and the Laborers International Union of North America this season.

Also at Goodyear, shareholders gave 41 percent support to a "pay for superior performance" proposal filed by the International Brotherhood of Electrical Workers. The resolution seeks a greater use of performance-based cash and equity compensation and better disclosure of performance measures and targets. The vote exceeded the 34.7 percent average support that similar proposals received last season.

*This article originally appeared in the April 13 edition of Governance Weekly.