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March 13, 2009 Forum Report:

Inviting Comments on Chia’s “Ten Things to Keep in Mind”


Mr. Chia's list also been presented on the Say on Pay 2009 clearinghouse project web site, where you may find directly posted comments.


See comments:

C. William Jones, March 15, 2009

Leonard Rosenthal, March 30, 2009



Forum Report


Inviting Comments on Chia’s “Ten Things to Keep in Mind”


            The list of “Things to Keep in Mind” below is offered for your consideration and comment by Douglas K. Chia, Senior Counsel & Assistant Corporate Secretary of Johnson & Johnson and a member of the Forum’s Program Panel for “Say on Pay.”  (It should be noted that Mr. Chia is of course presenting his own personal views and not the positions of Johnson & Johnson.)


            It is important for people who actually understand the processes and decision-making requirements to think about these issues while “Say on Pay” is being tested this year – and it is also important that you tell each other what you think.


You can either send your comments to me or post them directly on the Say on Pay 2009 clearinghouse web site, where Mr. Chia’s list will also be posted.  If you send the comments to me, you should of course say whether you want them to be considered private or reported to other Forum participants.  Comments intended for reporting will of course be posted on both the SOP 2009 clearinghouse and on the Forum’s regular web site.


GL – March 13, 2009


Gary Lutin

Lutin & Company

575 Madison Avenue, 10th Floor

New York, New York 10022

Tel: 212-605-0335






March 13, 2009


Ten Things to Keep in Mind When Creating a “Say on Pay” Requirement


With over 300 U.S. public companies now subject to a “say on pay” requirement, many experts in the corporate governance world have declared say on pay for all U.S. public companies to be a fait accompli and are looking to Rep. Barney Frank, as Chairman of the House Financial Services Committee, to enact this into law.  Here is a list of ten things that I would want those who are drafting the ultimate laws and regulations to keep in mind.


  1. Whatever “say on pay” ends up looking like, let’s make sure it yields information that will be useful for investors, companies (management) and boards alike.
  2. Before implementing say on pay, let’s constantly ask ourselves, “What we are trying to accomplish with say on pay?” and see if the proposed solution would actually help to accomplish that goal.
  3. Before implementing a say on pay, let’s examine whether the current disclosure requirements yield a product that lends itself well to this kind of vote.  If not, what kinds of changes need to be made?  What additional information is needed? 
  4. If “say on pay” is enacted, let’s use this opportunity to consider reasonable reforms of the shareholder proposal process and easing restrictions on companies’ ability to communicate with their beneficial owners.
  5. Phrasing matters.  Say on pay must be clear on exactly what shareholders are being asked to vote.
  6. Say on pay doesn’t necessarily have to happen at every company every year, and may actually be more effective if it’s not an annual vote.
  7. Be careful of the “it can’t hurt” argument.  There are always unintended consequences.  Recent history has shown that attempts to place downward pressure on executive compensation have sometimes had the opposite effect.  If say on pay votes end up being meaningless, an important opportunity will have been lost.   
  8. Let’s first hear from the companies that have adopted and tried say on pay, or are trying it for the first time this year, to see what their experiences have been and what they were able to gain from it.  Let’s also watch carefully the upcoming say on pay votes at the TARP companies before expanding this to the rest of the market.
  9. Let’s remind ourselves of the importance of the diversity of state laws before Federalizing another aspect of securities law, carefully balancing the pros and cons.
  10. Involve corporate governance professionals who work at corporations in the process of considering and creating this.  Don’t just assume that we’re all opposed to reforming executive compensation.  Since we see what goes on in companies and boardrooms, we bring an important perspective to the discussion and may be helpful in identifying what will be effective and what may end up setting things back.


Douglas K. Chia

Senior Counsel & Assistant Corporate Secretary

Johnson & Johnson

New Brunswick, New Jersey





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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