The Shareholder ForumTM


"Say on Pay" Proposals

Forum Home Page

"Say on Pay" Home Page

Program Reference


Brian P. Hillery, whose comments are presented below, is the founder of WCS Strategic Partners, a corporate governance consulting firm, and until 2005 had been Vice President of Wellington Management Company.

For the papers and views referenced by Mr. Hillery, see



Comments of

Brian P. Hillery

October 11, 2008



I have read with interest the views of many regarding the Forum on “Say on Pay”. As someone who has seen quiet diplomacy work between companies and institutional investors, this is in response to the invitation for comments on the Gordon and Hallock papers.

A few years ago, investors upset with a company’s activities and practices expressed their concern by withholding votes for directors seeking election to a company’s board. Withholding votes on directors was an effective tool to express concern. As different forms of majority voting for the election of directors becomes more the norm in the United States, the protest vote of withholding votes on directors becomes more problematic.

Executive compensation has been the lightning rod of shareholder protests in recent years. Shareholders have expressed their views by withholding votes on those directors who sit on compensation committees. How can one weigh in on the compensation practices of public companies now with a majority voting standard? The simple answer is an annual advisory vote on executive compensation. This proposal will not only allow shareholders to express their views but also create more dialog between companies and shareholders. The annual vote on executive compensation should not be seen as micromanaging the compensation decisions rather it should be seen as a gauge on how well the compensation practices of a company are perceived by shareholders. If an advisory vote on executive compensation receives a higher than normal negative vote, it will mean the company will have to get out and work with their largest shareholders to determine the reasons for such a vote. This will lead to more dialog which is the foundation of an annual advisory vote on executive compensation.

I support the comments made by John Wilcox which this forum published on August 1, 2008. An annual advisory vote on executive compensation is a low-impact means for shareholders to tell directors that more work needs to be done.

To determine how mutual funds voted on this issue, my firm, WCS Strategic Partners (“WCS”), reviewed a sampling of the N-PXs submitted to the SEC for the 2008 proxy season. We reviewed the voting activities of 17 mutual fund firms regarding the shareholder proposal requesting an advisory vote on executive compensation. Our study included approximately 250 individual mutual funds and how each voted ten companies that received a shareholder proposal requesting an annual advisory vote on executive compensation. The results of this small study confirm Professor Hallock’s observation on “Say on Pay”: 56.2% of the votes reviewed voted against this shareholder proposal, 29.6% supported this measure while 13.7% abstained. Clearly, there is work to be done.


Brian P. Hillery

WCS Strategic Partners

Reading, Massachusetts





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.