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July 15, 2008 Forum Report:

Asking How “Say on Pay” Relates to Marketplace Success



Forum Report

Asking How “Say on Pay” Relates to Marketplace Success

            An initial open meeting of the new Shareholder Forum program for reconsidering “Say on Pay” is expected to be scheduled for some time in early August.  Its purpose will be to decide what needs to be addressed, and what projects should be organized.

This Forum program requires special attention to the need for decision-making information that is (a) relevant and (b) reliable.  Your comments will be appreciated to guide our progress, either with the following preliminary plans or with other processes you may suggest.

Focus on what actually works

            Discussions with several Forum participants have encouraged a fundamental shift in how we look at the issues:

    How would “Say on Pay” benefit the management and shareholders of a company that has been successful in the marketplace?

This is very different from the focus of activists on how to fix a company they have targeted as a failure.

            Putting it in economic terms, we would be looking at “Say on Pay” in the context of a capitalist system in which assets should be managed by those who win the marketplace competition.  Executive compensation is a key element of that system, assuming it rewards the winners and stimulates the desired competition.  The question we need to ask, then, is whether a “Say on Pay” policy will help to separate the winners from the losers, and support the essential process of reallocating capital to those who can manage it most effectively.

Our examination of what actually works in the marketplace should of course be based on observations of companies that have actually demonstrated marketplace success.  Suggestions of exemplary companies – tested winners of commercial competition that properly reward both managers and investors – will be welcomed.

Assure the reliability of information

            Responding to concerns about the conflicting information cited in support of the various advocacy positions, we are considering the organization of a special Forum panel to review the academic integrity of research and data being presented to decision-makers.  We may also want this panel to be able to initiate relevant research.

            Investors as well as corporate and public decision-makers need to know what information is reliable.  The reports presented by governance experts and policy advocates to influence marketplace decisions should be held to exactly the same standards of accuracy that we demand in SEC-regulated reports presented by corporate managers.


            The “Say on Pay” issue is obviously complicated, but we can make it a lot less confused by looking at real facts and concentrating on the ultimate interests of investors – which should, of course, be the same as the interests of the corporate managers who would be rewarded for making good use of the investors’ capital.

            Please tell me during the next week what you want to know, and what you think other investor, corporate and government decision-makers should understand to make our marketplace work fairly and effectively.

           GL – July 15, 2008


Gary Lutin

Lutin & Company

575 Madison Avenue, 10th Floor

New York, New York 10022

Tel: 212-605-0335






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.