Reconsidering "Say on Pay" Proposals
The Shareholder ForumTM has been asked by several participants to initiate a
new program for reconsidering the “advisory voting” concepts defined in its
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:
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?
Will focus on conformance with "good governance"
distract both corporate and investor decision-makers from the essential
purpose of compensation to reward competitive success?
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
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.
July 7, 2008
Lutin & Company, 575 Madison Avenue, New York, New York 10022
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