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July 8, 2009 Forum Report:

Defining the New Rules for Shareholder Communication



Forum Report: “Say on Pay”


Defining the New Rules for Shareholder Communication

Last week’s expected action by the SEC to propose rules for TARP recipient implementation of “Say on Pay”[1] was accompanied by support for the types of investor communications and information that Forum participants have consistently advocated as a foundation for sound, long-term corporate performance.[2]

All of us should appreciate this recognition of informed professional views in the formulation of historically important public policies, and be encouraged by the continuing opportunity to help define effective marketplace practices on which a healthy economy can be built.

Your suggestions will be welcomed during the next week to prioritize issues and guide Forum plans for supporting projects.  Preliminarily, these are three of the subjects that may justify our attention:

  1. SEC rulemaking:  The SEC has invited comments on its proposed rules for TARP recipient implementation of “Say on Pay” processes.[3]  While these rules are to be applied only to TARP recipients, it can be assumed that they will serve as a model for any more broadly applied rules and marketplace practices.  Many Forum participants therefore consider it important to make good use of whatever we’ve learned – or can learn – in this year’s definition of TARP processes.
  2. Information requirements:  Both corporate and investor decision-makers will need more information to support their policy development, reporting, analysis, and voting in relation to compensation issues.  The sheer quantity of this additional information will require significant improvements in the efficiency of the data sourcing and research processes.  And, as many of you have observed, the inevitable concern about cost management must be balanced by support for both the quality and diversity of research, so that we do not end up with a bureaucratized voting function that defeats the essential purpose of “Say on Pay.”
  3. Shareholder communications:  Making good use of “Say on Pay” and other SEC-supported processes will require the development of alternatives to the shareholder communication rituals that were based on paper mailings and annual meetings.  Several Forum participants are actively considering or testing alternatives, including the enabling technologies.  We have also been exploring arrangements for partnering to develop communications processes that can be broadly used by Forum participants.

Please let me know what is important to you, and what you think will be important to your fellow marketplace decision-makers.

GL – July 8, 2009


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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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.