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RiskMetrics (f/k/a Institutional Shareholder Services - "ISS") Risk & Governance Blog, December 23, 2009 article








Wednesday, December 23, 2009

Will There Be More Voluntary “Say on Pay” Adoptions?
Submitted by: Ted Allen, Publications

“Say on pay” proponents are hopeful that the U.S. House of Representatives’ approval of an annual advisory vote requirement and Goldman Sachs Group’s agreement to hold a shareholder pay vote will prompt more companies to follow suit.

“There will be an increase, as the waiters jump on board to try to get credit for doing it before being ‘forced’ to,” said John Keenan of the American Federation of State, County, and Municipal Employees, an advisory vote proponent. “Goldman did this to try and get away from being ‘public pay enemy number one,’ and this move only hastens the tipping point for other companies.”

Some of these voluntary adoptions likely will occur during the next three months before the proxy statement filing deadlines for companies with spring 2010 meetings. Once again, proponents plan to submit about 100 proposals seeking annual advisory votes on compensation. Those proposals averaged 45.6 percent support at 76 meetings in 2009, up from 41.5 percent in 2008, according to RiskMetrics Group’s proxy season scorecard.

Another pay vote proponent, Tim Smith, a senior vice president with Walden Asset Management, observes that some companies still are reluctant to take action because they don’t know whether the Senate will also approve advisory vote legislation. “It’s hard to predict the trends here, though we obviously feel the Goldman Sachs decision sets a significant precedent and adds pressure, especially on financial companies,” Smith said.

So far, at least 38 U.S. companies have pledged to hold voluntary “say on pay” votes, according to data collected by proponents, RiskMetrics, and the law firm of Cleary Gottlieb Steen & Hamilton.

Among the other issuers to take this step recently are Yum Brands, which agreed to provide a pay vote in 2011 if not mandated by federal law by then, and Mobile Mini, which said Dec. 14 that it will hold a triennial vote starting in 2010. Bank of New York Mellon plans to hold a pay vote in 2010, Keenan said. Intuit also has agreed to conduct an advisory vote in 2010; Hill-Rom Holdings and Bed Bath & Beyond plan to do so in 2011. According to proponents, 17 issuers (including Yum Brands) have taken action after shareholder “say on pay” resolutions received majority support.


Copyright © 2007 RiskMetrics Group




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