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Note:  The author of the article below, Timothy Smith, has presented his comments on the Gordon paper as an advocate of "Say on Pay" and a leader of the "Working Group" organized to consider its proponents' views.  It should be noted also that Mr. Smith, together with another Working Group advocate of "Say on Pay," has requested revisions of the Forum Summary for the "Say on Pay" program (seen in the left column of this program's main page), and that the Forum's manager has agreed to consider their suggestions to assure a fair and impartial presentation of their position.


RiskMetrics (f/k/a Institutional Shareholder Services - "ISS") Risk & Governance Blog, October 29, 2008 article














Wednesday, October 29, 2008


Schering-Plough Will Survey Shareholders about Pay
Submitted by: Carol Bowie, Governance Institute

Schering-Plough announced on Oct. 24, 2008 that it will conduct a shareholder survey on director and executive pay. The survey will be mailed to shareholders with the company’s 2009 proxy materials, and results will be discussed in the CD&A section of the proxy statement for the 2010 annual shareholder meeting.

Schering-Plough says the survey is intended to “inform future work of the Compensation Committee and the Board” by providing a window into shareholders’ views of the executive pay program.

“This survey is evidence of our commitment to seek and consider shareholder input, as we did in 2006 with the shareholder survey on majority voting for directors” said Pat Russo, Chair of the Nominating and Corporate Governance Committee of the Board, in the company’s press release. Indeed, the company conducted a shareholder survey on governance issues after its 2006 annual meeting, which led to inclusion of two management proposals to amend the bylaws on the ballot for the 2007 meeting: one was to eliminate certain supermajority vote requirements, and the other was to elect directors by majority vote rather than plurality. The first proposal passed, but the second did not, although the board subsequently amended the bylaws to include a director resignation policy, triggered if a nominee in an uncontested election fails to receive support from a majority of votes cast.

It appears that the 2006 survey was conducted by an independent consultant rather than being mailed to shareholders with the proxy statement. For the executive pay survey, Rich Koppes, former General Counsel of the California Public Employees’ Retirement System (CalPERS) and currently of counsel to Jones Day law firm and at Stanford Law School, will provide oversight of the process used to tabulate and report the results, according to the release. Koppes also will serve as the conduit for shareholders wishing to respond to the survey on a confidential basis.

Schering-Plough has participated in the Working Group exploring the issue of “say on pay” and presumably is hoping to head off annual votes, although the company did not indicate how often it intends to conduct its pay survey. A questionnaire should give the compensation committee more nuanced information than an up-or-down vote—and would take proxy advisors out of the equation--but with anger growing daily about extravagant pay practices in the troubled financial sector, Congress may still have advisory pay votes on its to-do list.


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