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For a subsequent Towers Watson copyrighted client report with more details of the survey results that were summarized in the press release below, made available to Forum participants with permission, and for an interview with its author, see


Towers Watson (as published by BusinessWire), January 5, 2011 press release


Business Wire




U.S. Companies Divided on Say-on-Pay Frequency, Towers Watson Poll Finds

Few Companies Have Process in Place to Act on Results

NEW YORK--(BUSINESS WIRE)--U.S. companies are split on how frequently they should put their executive compensation programs to a nonbinding say-on-pay shareholder vote, according to a new poll conducted by Towers Watson (NYSE, NASDAQ: TW), a global professional services company. Furthermore, the poll found that while some companies are making adjustments to their pay-setting processes to prepare for the say-on-pay era, many are not yet clear on how to assess the success of the vote, and even fewer are prepared to address the results of the shareholder poll.

“The survey responses suggest that companies are struggling to understand the implications of say-on-pay votes and many are taking a wait-and-see approach to measuring success”

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires companies to conduct say-on-pay votes at least every three years, but the law leaves it to each company to decide whether it will hold annual, biennial or triennial votes. Companies are also required to put the say-on-pay frequency question to a nonbinding shareholder vote at least every six years. Proposed SEC regulations would require public companies to conduct the first of these so-called “say on when” votes in 2011.

Conducted in mid-December, the Towers Watson poll of 135 U.S. publicly traded companies found that 51% of respondents expect to hold annual say-on-pay votes, while 39% prefer the vote be held every three years, and 10% anticipate holding biennial votes. The poll, however, found companies have a range of reasons for favoring a particular voting frequency. Four in 10 respondents cited accountability to shareholders and a desire to minimize administrative burdens as factors having the greatest influence on their vote-frequency recommendation, while slightly fewer cited shareholder preferences, proxy advisor policies and providing shareholders with an avenue to express concern about executive pay without casting negative votes on other matters as key factors.

“Clearly, there’s no single right answer to the question of how frequently these votes should be conducted that will work for every company,” said Towers Watson senior consultant James Kroll. “Each company seems to be assessing its own circumstances and needs, taking into account its specific shareholder composition and the degree of potential shareholder concern about the company’s executive pay programs.”

The survey also found that nearly half (48%) of surveyed companies are making some adjustments to their executive pay-setting process in preparing for the upcoming proxy season, although many companies have already strengthened their processes in recent years in light of growing shareholder activism and intensifying scrutiny of pay issues. Among those making further changes in preparation for the 2011 proxy season, 65% are devoting more attention to explaining their programs in the Compensation Discussion & Analysis (CD&A), 41% are performing additional analyses on the link between their executives’ pay and company performance, and 30% have made or are considering changes to programs such as severance, change-in-control benefits and perquisites that have high visibility.

Somewhat surprisingly, almost half (49%) of the respondents don’t know what level of favorable shareholder say-on-pay votes will be considered a successful outcome by their boards, and only 8% of the respondents have a process in place for analyzing the results of the vote and developing appropriate action plans in response to potential shareholder concerns. Of those companies that have defined how they will evaluate success, most believe that a favorable shareholder vote of at least 80% would be considered successful.

“The survey responses suggest that companies are struggling to understand the implications of say-on-pay votes and many are taking a wait-and-see approach to measuring success,” said Kroll. “While many companies have been taking steps to make their executive pay programs more shareholder-friendly in recent years, relatively few have been thinking beyond their first say-on-pay votes to how they will analyze and address shareholders’ input going forward. This new era will require companies to step up their ongoing communication with shareholders and tell a compelling story about how their pay programs help drive business performance, while also listening and responding to shareholder concerns. This is not a one-shot deal. It will be a continuous process.”

About Towers Watson

Towers Watson (NYSE, NASDAQ: TW) is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. The company offers solutions in the areas of employee benefits, talent management, rewards, and risk and capital management. Towers Watson has 14,000 associates around the world and is located on the web at


Ed Emerman, +1 609-275-5162
Whitney Kuhn, +1 703-258-7648




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.

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