Corporate & Securities Law

The Say on Pay Experience So Far This Season

By dave

The Say on Pay Experience So Far This Season

As the proxy season progresses, we are starting to see the results from efforts by activist investors to move Say on Pay forward through the shareholder proposal process. Not surprisingly, proposals asking companies to implement an advisory vote on executive compensation have been garnering significant levels of support this season, as the outrage over pay levels continues largely unabated.

Last week, AFSCME issued a press release noting "[w]ith 29 Say on Pay proposals voted on since the start of the 2009 shareholder season, ten have received a majority of the votes cast (out of FOR and AGAINST votes). These 29 proposals have averaged more than 46 percent support, and this level of support is expected to increase as companies release their final voting numbers. Approximately 80 Say on Pay shareholder proposals are expected to be voted on this year." Generally, the level of support this year has been higher than the support received in similar proposals in the very short history of the Say on Pay shareholder proposal.

Ted Allen of RiskMetrics Group recently provided some additional insights in the RMG Risk & Governance blog, noting "[t]he best showing so far this season was 62 percent support for a shareholder proposal at Hain Celestial; the lowest were 30 percent votes at Eli Lilly and Burlington Northern Santa Fe, according to RiskMetrics data. The two votes appear to reflect the firms' ownership mix. At Lilly, a family endowment holds an 11.9 percent stake; at Burlington Northern, Berkshire Hathaway owns a 22.6 percent stake. In the coming weeks, 'say on pay' proposals are scheduled for a vote at Chevron, ConocoPhillips, Exxon Mobil, Home Depot, McDonald's, Qwest Communications, Raytheon, Target, UnitedHealth, and Yum! Brands."

For at least one company that has already implemented Say on Pay, apparently not all shareholders are on the warpath - as noted in this Washington Post article, last week shareholders overwhemingly supported executive pay at Verizon Communications with a 90% vote in favor!

CalSTRS Calls for Pay Reforms at 300 Companies

Say on Pay features prominently in a new initiative announced by CalSTRS last week. CalSTRS is calling on 300 of its portfolio companies to develop executive compensation policies and to allow shareholders advisory votes on those policies.

As part of the initiative, CalSTRS has published model executive compensation policy guidelines, as well as some broad executive compensation principles for the targeted companies to follow. CalSTRs plans to step up its engagement with the 300 targeted companies on executive pay issues, and in the event that the companies are unresponsive, the pension fund will ultimately vote against or withhold votes in directors' re-election.

Deal Protection: The Latest Developments in an Economic Tsunami

Tune into the DealLawyers.com webcast tomorrow - "Deal Protection: The Latest Developments in an Economic Tsunami" - to hear these experts analyze the latest Delaware law developments in deal protection:

- Clifford Neimeth, Partner, Greenberg Traurig
- William Haubert, Director, Richards, Layton & Finger
- Ray DiCamillo, Director, Richards, Layton & Finger

- Dave Lynn

Full post as published by The Corporate Counsel.net Blog on May 11, 2009 (boomark / email).