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October 5, 2008 Forum Report:

Rescue Act Provisions to Be Considered at October 14 Meeting



Forum Report

Rescue Act Provisions to Be Considered at October 14 Meeting

            The “Emergency Economic Stabilization Act” signed into law Friday afternoon includes provisions relating to executive compensation that you may want to consider in the context of issues being addressed in Forum’s “Say on Pay” program, and that you will have an opportunity to discuss at next week’s open meeting:

     Differentiating companies that require increased oversight – The Act’s compensation provisions apply generally only to the companies that participate in the bail-out, and also impose greater levels of supervision on the companies that get more financial support.  While it may be inappropriate for us to make any assumptions about the economic views on which Congressmen based this approach, it certainly suggests increased governmental receptivity to the views of many Forum participants who advocate policies that distinguish successful companies from failures.

     Increased public interest in fairness of compensation – Whether the Act’s provisions prove to be effective or not, they evidence a clear public interest in the fairness of executive compensation.  The public servants elected next month in the current crisis environment can be expected to show great interest in considering both the marketplace and regulatory means of assuring this fairness. 

     Saving “Say on Pay” for post-election attention – A proposed provision for “Say on Pay” was ultimately excluded in the final version of the Act.  Some Forum participants have speculated about this reflected either a political intent to enact the previous for of the Frank bill in its original, more broadly applicable form, and others have speculated that Congress will now defer action until they have a chance to consider the priorities of the economic turmoil.  Being practical, either political direction suggests that Forum participants focus now on their own decisions about what will benefit the marketplace.

            For those of you interested in a detailed legal review of the Act’s provisions relating to compensation, the following memorandum can be downloaded from the Forum web site:

            Please let me know if you have any comments on these or other issues.

           GL – October 5, 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.

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