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Public Interest Program
Forum Summary
"Say on Pay" Proposals
July 7, 2008
The Shareholder Forum has been asked by several participants to
initiate a new program for reconsidering the “advisory voting” concepts defined
in its 2006 project.
When Forum participants first considered advisory voting, it was
viewed as a process that could be adapted individually by corporate managers and
investors as a foundation for constructive communication about common interests
in a company’s success. Its subsequent transformation into a confrontational
activist demand for legislatively imposed “Say on Pay” has necessarily raised
important new questions:
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If advisory voting is required for all publicly traded US
companies, can investors satisfy their fiduciary responsibilities without
increasing reliance on proxy advisors or other bureaucratized processes?
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Will focus on conformance with "good governance" theories
distract both corporate and investor decision-makers from the essential
purpose of compensation to reward competitive success?
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Ultimately, will advisory voting help investors make
better decisions about their allocations of capital?
These and other concerns are reflected in increasing marketplace
uncertainty about advisory voting. Recent news reports of declining support for
“Say on Pay” proxy proposals
have been countered by RiskMetrics-ISS reports presenting statistics to show
that their activist client network seemed to be making progress. Academic research also reports significant divisions among investors, including
between “governance” and investment representatives within fund managers, and
further suggests that many of the governance professionals who advocate
“compulsory” advisory voting view it as a means of increasing their influence.
To address these issues,
Sibson Consulting has supported the organization of this open Forum program
to examine how “Say on Pay” might serve the public interest in essential
marketplace processes of enterprise competition and capital allocation. Corporate, investor and professional representatives with recognized expertise
in successful performance will be invited to support the program in an advisory
panel that guides the Forum’s conduct of workshops, academic studies, surveys,
open meetings or other processes as required for a full public review of the
issues and a concluding report.
This Forum program is
open, free of charge, to all marketplace decision-makers and
the professionals who advise them, according to the Forum's standard
Conditions of Participation.
Program Panel (2009):
Douglas K. Chia, Johnson & Johnson
Hye-Won Choi, TIAA-CREF
Cornish F. Hitchcock, Hitchcock Law Firm and Amalgamated Bank
Bess Joffe, Hermes EOS
Cary I. Klafter, Intel
Corporation
Richard V. Smith, Sibson
Consulting
Louis M. Thompson, Jr., Kalorama Partners
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