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October 16, 2008 Forum Report:

Summary of Open Meeting Discussions



For background information on issues presented for consideration, Program Panel members and invited speakers, see



Forum Report

Summary of Open Meeting Discussions

            Both the levels and ranges of participant concerns about how “Say on Pay” might be implemented extended beyond what was anticipated in either the agenda or schedule for Tuesday's open meeting.  We finally concluded the discussions with a general consensus that participants wanted to continue the examination of many issues that had been raised, and several of the participants volunteered to help prepare reports for Forum consideration at another open meeting.

            A record of the meeting will be made available to Forum participants, courtesy of Sibson Consulting.

            Following is a summary of preliminary plans to follow up on two of the specific interests expressed by participants, and of the direction set for current Forum attention to “Say on Pay” issues.

Gordon-Nowak views

            There was great interest in the alternative views of the professors who had been invited to start the meeting.  Jeffrey Gordon first discussed his observations of “herding” reactions to UK advisory voting and recommended deferring US legislation of “Say on Pay,” and then Eric Nowak discussed his observations of European reactions to “executive rip-off” and said that he saw no economic justification for waiting.  Responding to participant reactions during and after the meeting, I’ve encouraged both of them to consider continuing the exchange, either at another meeting or in written comments.

            For now, Professor Gordon has offered the following additional observation in an email note:

“…[T]he need for boards to do a better job in explaining their comp practices [citing as an example responses to the TIAA-CREF list of ten questions, addressed below] or alternatively, the goal of restructuring CEO pay (to reduce CEO centrality, eg), could be a achieved by the ‘demonstration’ effect of a few well chosen ‘just vote no’ campaigns against a Comp Committee.   This could be more effective than an advisory vote and would have fewer side effects.”

            Professor Nowak, having returned to Switzerland, has offered to provide a written summary of his comments within a few days.

Information needed by investors

            Discussions during the meeting established (a) recognition by virtually all investor, corporate and professional participants that CD&A reports required by current SEC regulations are not a satisfactory information resource for efficient investor decision-making, but that we should not expect significant regulatory improvement within a year, and (b) broad concern about the negative effects of “box-ticking” or “bureaucratized” voting by investors.

            Several participants expressed interest in ways to present compensation information more simply for investor decisions.  However, responding to my question to him as a consultant to compensation committees, Program Panel member Rick Smith estimated that the amount of time a director had to spend reviewing information to approve a compensation plan might range from 15 to more than 40 hours.  Most meeting participants appeared to believe that investors could satisfy their fiduciary duties with less detailed understandings than a company’s directors, but it was clear that there would be genuine challenges to presenting the required information in brief summaries.

            As a proven means of assuring the desired company-specific review, Program Panel member John Wilcox advocated the TIAA-CREF approach of seeking corporate management’s responses to a standard set of ten questions.[*]  It was recognized, however, that most investors lack the resources for the research and communications required to support this approach.  Participants agreed, though, that a workshop project should examine possible means of applying the “10 Question” approach to a broader range of investor decision-makers.

Objectives of Forum participants

            It was generally accepted by meeting participants that “Say on Pay” issues need to be addressed in a context that applies to the entire range of relevant companies as well as the entire range of relevant investors.  Responding to Program Panel member Doug Chia’s expressed concern about including companies with various interests that differ from his, I noted that there was in fact nobody in the meeting from a small company, for example, and encouraged participants to suggest representatives of that and other important perspectives who might benefit from our exchange of views.  This diversity of perspectives was not considered to be in any way inconsistent with the Forum’s stated intent to consider “Say on Pay” issues by focusing on what actually works at successful companies, rather than on theories designed to remedy unsatisfactory performance.

Regarding participant suggestions for Forum attention to regulatory issues, particularly relating to the CD&A or other SEC reporting requirements, we assumed that consideration of regulatory alternatives would have little value until a new administration is in place.  It was in any event decided to concentrate our immediate attention instead on decisions that can and should be made by marketplace representatives.  Forum programs are intended, after all, to serve participants who want to decide what they should do, themselves.

            The meeting was concluded with an invitation to its attendees to help guide the Forum’s progress.  This invitation is of course extended to all of you, with the reminder that the Forum is open to anyone who wants to hear or offer views.

           GL – October 16, 2008

Gary Lutin

Lutin & Company

575 Madison Avenue, 10th Floor

New York, New York 10022

Tel: 212-605-0335



[*] Mr. Wilcox had provided a copy of TIAA-CREF’s “10 Questions for Evaluating CD&A's” with his November 13, 2007 comments on “Information Requirements for Investor Decisions,” submitted in relation to the Forum’s previous Options Policies program.




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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