Few Companies Preparing for Say on Pay

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Few Companies Preparing for Say on Pay:


Few Companies Preparing for Say on Pay >

Oct. 22, 2009 — Scottsdale, Ariz. — Few companies have taken steps to prepare for say on pay or plan to do so in the next six months, despite building momentum to require a shareholder vote on executive pay at all publicly listed firms, according to a new survey. >

This past summer, the U.S. House of Representatives approved the Corporate and Financial Institution Compensation Fairness Act of 2009, which would require an annual, non-binding advisor shareholder vote on pay. Most observers expect the U.S. Senate to also approve the legislation, according to Pearl Meyer & Partners, which conducted the survey.>

Yet just 7% of the 231 survey participants in the online Say On Pay Survey said their company is “very concerned” about such a vote, and another 35% indicated they were only “somewhat” concerned. Moreover, more than two-thirds (66%) said their company hasn’t taken any steps to prepare for a Say on Pay vote and only 35% plan to do so in the next six months. >

“Public companies are surprisingly reticent to address the very real likelihood of mandatory Say on Pay votes,” said Mike Enos, Ph.D., managing director of Pearl Meyer & Partners. “Although many believe such a requirement will not take effect the until 2011 proxy season, decisions being made now regarding 2010 compensation practices could potentially be the subject of Say on Pay votes in 2011.” >

The survey found that three-quarters of respondents predicted shareholders would approve a Say on Pay vote if it was held. “However, our experience with TARP clients suggests that proxy advisor groups have and will continue to recommend ‘no’ votes for some companies,” Enos said. “The first shareholder vote against pay is more likely a question of ‘when,’ not ‘if.’” >

According to Pearl Meyer & Partners, companies that have begun preparing for Say on Pay are most focused on steps that are easily achievable or are already part of their annual compensation review. Such common activities included: >

- Reviewing proxy compensation disclosure and analysis (CD&A) and related tables to ensure executive compensation disclosure is clear, complete and not subject to misinterpretation (82%) >

- Keeping abreast of the results of Say on Pay proposals at other companies (81%) >

- Reviewing market benchmarking practices, particularly with respect to selection of appropriate peer groups (69%) >

- Conducting analyses to ensure there is a strong link between executive pay and performance (62%) >
- Identifying any perceived poor pay practices in their executive compensation philosophy and program design (57%). >

Just 35% of respondents who indicated they were actively preparing for Say on Pay said they inquired into their institutional shareholders’ general views on Say on Pay or whether those investors are likely to follow the recommendations of proxy advisory firms. Also, about 30% of all respondents said they were unfamiliar with the overall voting guidelines of proxy advisory groups. “By failing to anticipate the attitudes and policies of institutional shareholders and proxy advisory firms, companies risk being blindsided at the last moment,” Enos said. >

The quality of shareholder communications also has received little attention, according to Pearl Meyer & Partners. Only 22% of respondents who indicated their company has taken steps to prepare for Say on Pay reported having in place an effective shareholder communications strategy, which would include a process for gathering feedback from institutional shareholders, unions and/or other constituencies on executive compensation programs. >

About the Survey Pearl Meyer & Partners’ “Say on Pay” survey took place in July and August 2009 and examined views on advisory shareholder votes across a broad range of industries and organization sizes. A total of 231 respondents participated in the survey, mainly compensation committee members, top human resources professionals, and members of the compensation group.

To read the full survey, log on to www.pearlmeyer.com/sayonpaysurvey.
Contents © 2009 WorldatWork. No part of this article may be reproduced, excerpted or redistributed in any form without express written permission from WorldatWork.

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To read the full survey, log on to http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.pearlmeyer.com%2Fsayonpaysurvey&esheet=6077703&lan=en_US&anchor=www.pearlmeyer.com%2Fsayonpaysurvey&index=1&md5=7e5a7aa66cef11b054efbec568c0aa53.
Contents © 2009 WorldatWork. No part of this article may be reproduced, excerpted or redistributed in any form without express written permission from WorldatWork.

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http://dreamlearndobecome.blogspot.com This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.