--Shareholders defeat advisory vote on executive pay at Knight
--CEO pledges to work with stockholders on compensation structure
--ISS, Glass Lewis highlighted compensation as a concern
(Adds comments from CEO, detail on proxy-advisor recommendations, other information, in the first, third and seventh through 12th paragraphs.)
By Jacob Bunge
Knight Capital Group Inc. (>> Knight Capital Group Inc.) shareholders on Wednesday voted against the executive pay structure at the U.S. brokerage and trading company's annual shareholder meeting, adding to a rash of investor rebukes to companies over compensation.
Shareholders voted down an advisory vote on Knight's executive-compensation plan by a margin of about 2-to-1. Proxy-advisory firms Glass Lewis & Co. LLC and Institutional Shareholder Services Inc. had recommended voting against the pay plan.
"Knight's board and management take seriously the design of compensation policies and procedures," said Knight Chief Executive Tom Joyce, speaking to shareholders after the vote. He pledged to work with stockholders to "clarify and enhance" Knight's pay structure.
The result extended a string of defeats handed to management teams by investors this year in votes around pay. Last month, Citigroup Inc. (C) investors rejected the banking company's executive-pay proposal, and the chief executive of insurer Aviva PLC (AV, AV.LN) resigned this week after shareholders challenged his compensation.
Last week saw executive departures following similar votes at two other U.K. companies, drug maker AstraZeneca PLC (AZN, AZN.LN) and Trinity Mirror PLC (TNMRY, TNI.LN), a diversified media group.
Knight CEO Joyce's compensation last year totaled about $6.4 million, up from $6.2 million in 2010, according to a report from ISS.
Glass Lewis objected to the CEO's annual guaranteed bonus of $3 million and other bonus payments that the advisory firm determined weren't linked closely enough to company performance. ISS told clients in a research note that Knight's executive pay lagged shareholder returns relative to peers, and that Joyce's pay last year was 2.5 times the median of its peer group.
That peer group changed last year in ISS's analysis of Knight. In its April report on Knight, the company was measured against more bank-holding companies and real- estate investment vehicles such as Apartment Investment and Management Co. (AIV), Glacier Bancorp Inc. (GBCI) and Park National Corp. (PRK).
Other financial-services companies previously included in Knight's peer group, such as SWS Group Inc. (SWS) and Janus Capital Group Inc. (JNS), were no longer included in ISS's comparison.
Last year, two senior Knight employees also collected restricted-stock awards that boosted their overall pay.
In its 2011 report on the company, ISS rated compensation at Knight a "medium" concern, versus a "high concern" in a report issued last month.
Shares in Knight settled 1.4% higher at $13.07. The stock has risen about 2.7% over the past 12 months, versus a 1% rise in the Standard & Poor's 500 stock index.
The Jersey City, N.J., company is one of the heaviest traders of stocks in the U.S., makes markets in a variety of securities and financial instruments, and offers a range of tools to help clients manage their dealings in financial markets.
Last year, Knight disclosed a restructuring during a three-year decline in stock-trading activity that has also weighed on Wall Street banks and exchanges.
-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; [email protected]; @jacobbunge