The Shareholder ForumTM


"Say on Pay" Proposals

Forum Home Page

"Say on Pay" Home Page

Program Reference


RiskMetrics (f/k/a Institutional Shareholder Services - "ISS") Risk & Governance Blog, February 13, 2009 article














Friday, February 13, 2009

SEC Rejects “No Action” Petition on TARP Proposal
Submitted by: Subodh Mishra, Governance Institute

In a surprising reversal, the Securities and Exchange Commission has rejected a request for “no action” relief on a proposal calling for the reform of pay practices and a limit to senior executive compensation at companies receiving federal aid under the Capital Purchase Program of the Troubled Assets Relief Program (TARP).

The decision may be reflective of a change in approach to such proposals under new SEC chairwoman Mary Schapiro.

The reversal is being lauded by SEC watchers. “TARP is one of the most significant policy issues and it’s good to see the SEC affirming shareholders’ right to have a say on such issues without insisting on word-smithing of fairly straight-forward proposals,” said attorney Cornish Hitchcock, who represents labor funds in no action proceedings.

The decision also is significant given that 15 of 22 similar proposal filings tracked by RiskMetrics have been challenged at the SEC. Three have thus far been omitted.

Birmingham, Ala.-based Regions Financial had petitioned the SEC to reject the proposal on the grounds it was “vague and misleading,” had been “substantially implemented,” and was comprised of multiple proposals, in violation of SEC Rule 14a-8(c). Pointing to an earlier decision by the commission to exclude a similar proposal at SunTrust Banks, Regions relied primarily on the vague and misleading argument noting the proposal appears to impose “no limitation on the duration of the specified reforms.” As it normally does, commission staff did not elaborate on why they were rejecting the company’s arguments.




Copyright © 2007 RiskMetrics Group




This Forum program is open, free of charge, to anyone concerned with investor interests relating to shareholder advisory voting on executive compensation, referred to by activists as "Say on Pay." As stated in the posted Conditions of Participation, the Forum's purpose is to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant is expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

The organization of this Forum program was supported by Sibson Consulting to address issues relevant to broad public interests in marketplace practices, rather than investor decisions relating to only a single company. The Forum may therefore invite program support of several companies that can provide both expertise and examples of performance leadership relating to the issues being addressed.

Inquiries about this Forum program and requests to be included in its distribution list may be addressed to

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.