Can someone tell me what my vote means when asked to vote FOR or AGAINST an Advisory Approval of Executive Compensation on a Proxy Vote.
This is a requirement that was added by the SEC which requires any shareholder to say-on-vote as to the compensation of the executives:
Companies are required to provide an advisory shareholder vote on the compensation of the top executives of the company – typically, the CEO, the Chief Financial Officer (CFO), and at least three other named executive officers. Companies are not required to use any specific language in asking for shareholder approval. Instead, each company has the flexibility to craft the exact language of the non-binding resolution that its shareholders will vote on.
The proxy vote, I get them for several companies myself, simply allow you to say what you think. You can choose to vote FOR, AGAINST, or ABSTAIN. The results are generally posted within 3 days of the votes being tabulated. Whatever the majority of the votes, including special assessment for higher value votes, will decide the outcome. The language used can be standard or crafted.
Do you think that the executive deserves to be paid the amount of money proposed or not? It is your company, partially, so you get a say in these decisions. Read the proxy document. It will say how much cash and/or deferred compensation (in what form) is being voted on. If you aren't sure whether it is too high or not enough, you should check the company board of directors' recommendation, also included in your proxy docs. They almost always recommend in favor, so that won't tell you much, but you should have a quick look.
I recall that the SEC changed the proxy voting law in 2011 or so. You can either vote FOR or AGAINST. There used to be a third choice, ABSTAIN but I believe that it was effectively rendered equivalent to just heaving the proxy vote docs in the trash and not voting at all.
Take 10 minutes to browse the proxy material. You might find it more interesting than you expect. Even if not, it is good for you, since proxy votes can include proposals by shareholders; not "activist shareholders" like Carl Icahn, but actual minority shareholders whose interests are probably aligned with yours. In that case, the board of directors might suggest voting against the proposed change.