Lawmakers Agree to Permit Less
Frequent Pay Votes
Ted Allen on June 24, 2010 12:19 PM
Investor advocates said
today that U.S. House and Senate lawmakers have agreed to accept an
amendment from Senator Mike Crapo to allow companies to seek investor
approval to hold advisory votes on executive compensation every two or
three years, instead of every year.
According to investor advocates, the Idaho Republican’s amendment to the
financial reform bill would direct companies when they hold their first
advisory vote to also ask shareholders to indicate their preferred
frequency for future votes on pay. It appears likely that some companies,
especially those with large insider share blocs, will be able to win
investor consent for less frequent pay votes.
This provision, which likely will remain in the final bill, would be a
setback for “say on pay” proponents, who prefer annual advisory votes and
want Congress to mandate that frequency at all public companies. A
majority of the 70 U.S. companies that have agreed to hold advisory votes
have pledged to do so annually, but a few, such as Pfizer and General
Mills, have opted for biennial votes, while others, such as Microsoft and
Supervalu, plan to hold triennial votes.
Crapo’s amendment also would authorize the SEC to exempt certain companies
and mentioned “small issuers.” A similar provision was in the bill passed
by the House in December.