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Note: Although Schering-Plough subsequently agreed to be acquired by Merck, they nevertheless conducted the survey on the sold company's report of past executive compensation. For their summary of survey results and the form that was delivered to shareholders with the proxy statement, see



October 24, 2008 Forum Report:

Survey Alternative to Proxy Voting on Executive Compensation



Sent: Friday, October 24, 2008 7:24 PM
Subject: Statement clarifying Schering-Plough's commitment

Referring to her announcement presented below, Susan Wolf of Schering-Plough has asked me to report that "this action is purely voluntary and was not negotiated in response to any proposal or pressure."
Gary Lutin
Lutin & Company
575 Madison Avenue, 10th Floor
New York, New York 10022
Tel: 212-605-0335


----- Original Message -----
Sent: Friday, October 24, 2008 5:04 PM
Subject: Negotiated alternative to proxy voting on executive compensation

Copied below are a cover note and announcement by Schering-Plough of their negotiated commitment to conduct another shareholder survey, this time relating to compensation issues, and a response provided by Timothy Smith of Walden Asset Management.
It should be noted that this commitment was developed independently of the Shareholder Forum.  Individuals to whom Schering-Plough sent its note below are addressed as the writer's "Governance Colleagues," unrelated to any participation in the Forum.
The Forum will of course continue to address the related issues, including those raised by Mr. Smith about (a) communicating with all rather than selected shareholders and (b) the questionnaire alternative to a more formal proxy vote.  Your comments will be welcomed.
Gary Lutin
Lutin & Company
575 Madison Avenue, 10th Floor
New York, New York 10022
Tel: 212-605-0335

To: Abe Friedman ; Alex Kelly ; Andrew Letts ; Ann Chapman ; Ann Yerger ; Anne C. Beal ; Beth Young ; Bill McGrew ; Bob Pieroni ; Bradley J. Webb ; Broc Romanek ; Carin Zelinko ; Cathy Friedman ; Cathy Rowan ; ; Claire Regan ; ; Cornish F. Hitchcock ; Craig Rhines ; Damon Silvers ; Ed Durkin ; Eric Roiter ; Glenn Booraem ; ; Hye-Won Choi ; John Chiang ; John Wilcox ; Joseph Grundfest ; Julie Tanner ; Kayla Gillan ; ; ; Laurence Hazell ; Laurie Thiel ; Linda Crompton ; ; Linda Selbach ; Lisa Campros ; Loretta Chan ; Lynn Turner ; M. Benny Hernandez ; Margaret Weber ; Marjorie Fine Knowles ; Mark Brockway ; Martha Carter ; Mary Collins ; Mary Morris ; ; ; Nora Nash ; Patrick McGurn ; Paul Hodgson ; Peter Mixon ; Rich Koppes ; Richard Ferlauto ; Richard Metcalf ; Robert McCormick ; Seamus P. Finn ; Shawn Johnson ; Shirley Westcott ; Steve Abrecht ; Steve Wallman ; Susan Hall ; ; ; Ted White ; Tim Smith ; ; Tracy Stewart ; Vidette Bullock Mixon
Sent: Friday, October 24, 2008 4:01 PM
Subject: announcement say on pay survey

Dear Shareholders and Governance Colleagues,
Please see the attached announcement of Schering-Plough's commitment to conduct a say-on-pay survey.
Call if you have questions.

Susan Ellen Wolf
Corporate Secretary
Vice President-Corporate Governance and
Associate General Counsel
Schering-Plough Corporation
2000 Galloping Hill Road
Mail Stop K-1-4525
Kenilworth, New Jersey 07033
Phone:  908-298-7354
Fax:  908-298-7303



Schering-Plough Announces A Shareholder Survey

On Director and Executive Pay



Kenilworth, New Jersey, October 24, 2008.  -- Schering-Plough today announced that it will undertake a shareholder survey on director and executive pay.


The survey will be mailed to shareholders with the proxy materials for the 2009 Annual Meeting of Shareholders.  The survey results will be discussed in the Compensation Discussion and Analysis section of the proxy statement for the 2010 Annual Meeting of Shareholders.


Schering-Plough believes its compensation program allows it to attract and retain a top management team with deep experience in the pharmaceutical industry, and, because pay moves up and down with company performance, motivates the team to provide long-term high performance.  This survey will provide shareholders’ views of the current program, which will inform future work of the Compensation Committee and the Board.


“This survey is evidence of our commitment to seek and consider shareholder input, as we did in 2006 with the shareholder survey on majority voting for directors” said Pat Russo, Chair of the Nominating and Corporate Governance Committee of the Board.


“We believe it is important to have an attitude of continuous improvement in our governance and compensation practices, even when the actions we take are well beyond the requirements at that time,” said CEO Fred Hassan.  Schering-Plough has taken many other voluntary steps to enhance governance and compensation since Hassan was named CEO in 2003, including:


Governance Enhancements


Compensation Enhancements

  • Eliminated classified board
  • Moved to double-triggers for equity award vesting in a change-of-control
  • Eliminated poison pill
  • Added strong stock ownership guidelines for management and the board
  • Committed that any new poison pill would be submitted to shareholders for a vote
  • Added performance-based stock options for executives
  • Eliminated supermajority voting
  • Added a two year holding period on exercise of stock options for executives
  • Added a majority voting policy for election of directors to the By-Laws
  • Eliminated time-based restricted stock for executives
  • Added a presiding director role and published the duties
  • For new executives, eliminated executive life coverage and prior service credit for pensions
  • Hold non-management executive sessions at each regular board meeting; and also at many meetings of key board committees, including the compensation committee
  • Eliminated cash long-term incentives, to increase the percentage of equity in the pay mix
  • Began a robust shareholder interaction program
  • Added performance-based stock units as a long-term incentive
  • Elected a governance officer and provides both governance and investor relations contact information in the proxy statement
  • Compensation Committee retained an independent compensation consultant, Ira Kay of Watson Wyatt, and the Company instituted a tough independence policy about Schering-Plough work with the firm


Rich Koppes, currently at Stanford Law School and formerly General Counsel of the California Public Employees’ Retirement System (CalPERS), will provide oversight of the process used to tabulate and report the survey results.  He also will serve as the conduit for shareholders wishing to respond to the survey on a confidential basis.




Walden Asset Management


Comment in Response to Schering Plough Announcement Establishing a "Say on Pay Questionnaire" for its Investors


Timothy Smith - Senior Vice President Walden Asset Management


"Schering Plough's decision, announced today, to send a questionnaire to all shareowners with is proxy statement next spring requesting feedback on its executive compensation philosophy and package is another act of corporate governance leadership by the company.


Instead of passively awaiting comments by its investors or reaching out to a limited number of major shareholders, Schering Plough has developed an extensive program of outreach to gauge investor reaction on their executives' compensation and will integrate that input into their Board Compensation Committee deliberations.


Unfortunately the company stopped short of instituting an official Advisory Vote for shareowners which would be a perfect complement to the questionnaire.


Of course it is vitally important to gather information and feedback from investors, but the time has come to allow shareowners an official vote on executive compensation just as we vote to elect Directors and ratify auditors.


The present economic crisis is an urgent reminder of the need to have additional checks and balances on executive compensation and an Advisory Vote is one important tool for investors to provide checks and balances to compensation packages that reward pay for non performance for example.


We fully expect the new Congress to establish an Advisory Vote through legislation as they address compensation issues. We believe corporate governance leaders should demonstrate statesmanship and forward looking vision and adopt advanced programs like Schering Ploughs combined with an Advisory Vote"  





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.