Should IR have a say on
say on pay?
Investor relations/shareholder engagement.
Synonyms? Don’t assume.
The, ahem, dialogue got started last summer when Gary Lutin invited
Shareholder Forum participants to comment on a draft report about
communications between boards and shareholders (the report is
here with a version of it
early Shareholder Forum version is
Steve Alogna, under the aegis of the
Yale School of Management Millstein
Center for Corporate Governance and Performance, wrote that say on pay
had reignited the governance dialogue between boards and shareholders but
the communications process was in disrepair.
initial comments included finance professor
Leonard Rosenthal complaining the draft paper showed ‘a lack of
familiarity with the practices of investor relations (IR) professionals.’ He
said the report needed to ‘seriously discuss the role of investor relations
professionals in board-shareholder communications, and in particular on the
issue of executive compensation. Indeed, addressing how this role can
enhance this communications process would greatly add to the discussion of
Last week there appeared a
column by Davis and
Lukomnik in Compliance Week
(available to Shareholder Forum participants
here). Writing more broadly about
say on pay, they said corporate secretaries may be best at handling
communications with proxy decision-makers because IROs are better-versed in
the quarter-to-quarter concerns of equity analysts.
Professor Rosenthal took
note. Commenting on the
Shareholder Forum, he complained once again that IROs were being shouldered
aside. Companies already have professionals expert at communicating with
investors and who are familiar with all the attendant disclosure issues. Why
create a new kind of profession to talk about governance when IROs can do
Yesterday Lukomnik fired back
with his ‘response to
the response’. He and Davis didn’t say IR had no place talking about say
on pay, he wrote. A company could make its corporate secretary responsible
for communicating around governance issues – or it could ‘restructure’ the
IR department to handle the job. The main message is ‘don’t assume’: don’t
assume the IR team can do it, and, presumably, don’t assume the corporate
secretary can do it. Just make sure someone’s doing it.
Gary Lutin is inviting comments
on this discussion in our
Say on Pay 2009 clearinghouse.
By Neil Stewart
Posted at 02:41 PM