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Welcome to our new forum

This website is a source of information and a forum for discussion on 'say on pay' provided by Corporate Secretary with the support of the Shareholder Forum.

We launched the site in March 2009 in response to the recently adopted federal regulations that require hundreds of TARP recipients to implement say on pay advisory votes. The same rules are expected to be extended to all companies. This clearinghouse includes examples of say on pay proxy language, expert commentary, legal opinion and academic materials. Institutional investors and corporates participating in the Shareholder Forum are invited to contribute to Say on Pay 2010


Colgate approves say-on-pay

Another company has hopped aboard the proverbial bandwagon. Colgate-Palmolive announced that it would provide shareholders with an advisory say-on-pay vote at the annual meeting May 7th.  The press release has more details.


Wells Fargo’s shareholders get say on pay again

New story from IR magazine's Brad Allen:

Bank joins ranks of say-on-pay volunteers

Wells Fargo & Company, for the second year in a row, is giving shareholders a non-binding advisory vote on executive compensation at its annual meeting. The company announced the move this morning, after the board of directors adopted the measure.

As Congress is writing financial reform legislation, a say-on-pay provision is likely to be included. A rewritten Senate bill is expected as soon as tomorrow, Thursday.

Brad Wilks, managing director at Sard Verbinnen and chairman of NIRI, says the move by Wells Fargo is ‘prudent and well advised’ and ‘part of a growing trend – something that will eventually become standard practice for US public companies.’

Describing it as ‘a bow to the inevitable – especially for financial services companies that have been the beneficiary of significant taxpayer-funded bailouts,’ Wilks predicts that banks in particular ‘will continue to be under close scrutiny [on compensation] for many years to come”

Microsoft Corp, Apple and Verizon are among the large public companies that have voluntarily adopted say on pay.

Continue reading "Wells Fargo’s shareholders get say on pay again" »


Investors Want Pay Info From Execs, not RiskMetrics

In case you missed IR magazine executive editor Neil Stewart's say-on-pay coverage last week, make sure to check it out here:

The Shareholder Forum lets some companies in on phase two of its survey

January 19, 2010

The Shareholder Forum is kicking off the next phase in its crusade to uncover the criteria and information sources that investors want to use when voting on executive compensation. This time several companies are being invited to include their own sub-samples of shareholders and compare their results against the main sample of institutional investors.

Phase one of the Shareholder Forum's say-on-pay survey, which was sent to a range of professional investors including members of the New York Society of Security Analysts and the Council of Institutional Investors, cast up two clear and somewhat surprising conclusions when the results were announced in December: Most investors want to know what directors have done to align executive pay with corporate strategy rather than whether it conforms with guidelines from third-party experts; and they want to get facts and explanations straight from management rather than from proxy advisers like RiskMetrics.

Continue reading "Investors Want Pay Info From Execs, not RiskMetrics" »


Investors Rank their Voting Criteria for Compensation Issues

The results of the Shareholder Forum survey of investor voting criteria on compensation issues are now available:

The surprisingly consistent rankings of criteria and information sources is important to investors, who must find a way to vote responsibly on all their portfolio company compensation issues, including stock plan approvals as well as "Say on Pay," and also to the corporate managers who want to accommodate their shareholders' information needs.

Quoting from the report's introduction:

    •Most investors want to know what the company’s board has done to define a compensation plan that             supports their corporate strategies, rather than whether the compensation conforms with guidelines                 established by corporate governance experts.

    •Investors also want to get both the facts and explanations directly from a company’s management,                 rather than from firms that are selling governance opinions.
The report includes charts as well as exhibits of comparisons, comments, etc.

Continue reading "Investors Rank their Voting Criteria for Compensation Issues" »


Inviting Your Views of Information Needed to Vote on Pay

Please tell us your views as an investor about what information will be useful in your proxy voting decisions concerning executive compensation.

The Shareholder Forum has just initiated an independent survey of a wide sampling of marketplace investors to help participants in our "Say on Pay" program understand what information corporate managers and research professionals should be providing. It will be very useful to know how those of you who have been actively following "Say on Pay" issues would answer the same questions. Your responses will of course be anonymous, but will be registered through a different web site link so that we can analyze Forum participant responses separately from the broader marketplace responses.

Please take 2 minutes to offer your views of the importance of information alternatives.

The questionnaire can be reached by this link for Forum participants: click here.

Results of the survey will of course be reported to all Forum participants, and will also be posted here on the "Say on Pay 2009" clearinghouse web site.

Your guidance will be appreciated.

Gary Lutin, Chairman, Shareholder Forum


Plans for Next Phase of “Say on Pay” Forum: Reality

Your comments will be welcomed to guide the development of plans for the next phase of Forum attention to “Say on Pay” issues, as we focus now on the practical implementation of voting with its associated information and communication processes.
Experiment with policy debate
Before addressing future plans, though, I want to congratulate all the Forum participants who helped define issues relating to public policies.  You should certainly take pride, for example, in the open exchange of views that guided Professor Gordon’s development of recommendations ultimately incorporated in the recent House bill.  (See note, below.)  Although the Forum was organized to consider marketplace decisions rather than political decisions, it is encouraging to see that our informed discussion of shared objectives can be equally effective in either context as an alternative to partisan advocacy practices.

One of the things we must decide now is whether the Forum should continue its attention to public policy issues.  Those of you with commercial or career interests in the Senate’s treatment of “Say on Pay” or the SEC’s rules for it should of course consider supporting an organization that advocates your particular interests, or even doing your own advocacy.  If your interest is “pure policy” development, you should consider contributing to the programs of one the university governance centers.  But if you think the marketplace might benefit from a non-partisan Forum project, please offer your suggestions.

Continue reading "Plans for Next Phase of “Say on Pay” Forum: Reality" »


A day in the life of Doug Chia

Johnson & Johnson’s Douglas Chia, chair of the corporate secretaries focus section here on Say on Pay 2009, represented the Society of Corporate Secretaries and Governance Professionals at a special session on proxy reform held last night at Baruch College for the National Investor Relations Institute’s New York chapter.

  • Drove to work listening to a podcast by a compensation consultant on say on pay and heightened compensation disclosure.
  • Arrived at the office and reviewed J&J’s draft 10-Q, which is to be filed next week.
  • Talked to J&J’s IRO about a potential disclosure issue around the 10-Q.
  • Over lunch, listened to a webinar by another compensation consultant.
  • Began the afternoon putting finishing touches on a comment letter on proxy access to be sent to the SEC by a group of companies.
  • Back in his car, talked on the phone to an internal group about a request from a UK-based socially responsible investor for additional disclosure.
  • Still on the road, phoned Washington contacts about Barney Frank’s say-on-pay bill, now in markup and headed for a vote Thursday or Friday.
  • At NIRI-NY’s panel session, told how corporate secretaries won’t be goofing off over the next several months. He expects many more similar days packed with say on pay, compensation disclosure and other proxy season priorities. ‘Double my pay, please!’
  • On his way home, was planning to think about how to reach out to retail shareholders –  without the broker vote, there will be a 25 percent to 30 percent block of shareholders voting on their own next year.
Neil Stewart, executive editor, IR magazine


Inviting Comments on Activist Concerns about Universal “Say on Pay”

Ed Durkin, the representative of the United Brotherhood of Carpenters (“UBC”) whose proposals of alternatives to universal “Say on Pay” have been stimulating debate among corporate governance professionals,  has encouraged comments from Forum participants on the observations he presented in the following letter to the SEC:

As an experienced activist in the advocacy of pension fund interests in executive compensation and other corporate governance issues, Mr. Durkin supported his very practical concerns with the following explanation (pages 3-4 of his letter):

Continue reading "Inviting Comments on Activist Concerns about Universal “Say on Pay”" »


Foundations for Implementation of “Say on Pay” Processes

Tim Smith, who chairs the focus section for “Say on Pay Advocates,” has submitted the following comment letter to the SEC regarding its proposed regulations for TARP recipient implementation of “Say on Pay:”You will see that Mr. Smith focuses on the relevance of the proposed TARP recipient rules as a precedent for expected broader applications of advisory voting, emphasizing the importance of defining the process as a foundation for more effective shareholder communications. This communication objective is clearly shared by a wide range of Forum participants with otherwise differing views about advisory voting, and is expected to be the uniting purpose of a Forum project addressing the proposed rules.

Anyone interested in the development of a practical foundation for communications is encouraged to help us develop Forum plans for this project.

Continue reading "Foundations for Implementation of “Say on Pay” Processes" »


Opportunity to Define New Rules for Shareholder Communication

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

(See July 1, 2009, U.S. Securities and Exchange Commission press release: “SEC Proposes Measures to Improve Corporate Governance and Enhance Investor Confidence.”)

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.

Continue reading "Opportunity to Define New Rules for Shareholder Communication" »


Comments on Harvard Business Review's "How to Fix Executive Pay"

The Harvard Business Review is running an online debate entitled "How to Fix Executive Pay."  I encourage everyone to follow this HBR debate as they have an all-star team of contributors. A recent post by Anne Sheehan, director of corporate governance for the California State Teachers’ Retirement System (CalSTRS), suggests part of the the solution is to "Give Shareholders Say on Pay." I've posted my response to Ms. Sheehan's piece at the HBR site and now reprint it here:

This piece starts out with the bold assertion, "Executive pay is broken." The title of the piece is "Give Shareholders Say on Pay." Thus, one would expect some kind of argument to follow that would clearly lay out why giving shareholders a "say on pay" will fix the broken executive pay. Finding none, this piece becomes a repeat of the many other articles, letters, blogs, tweets, speeches and shareholder proposals claiming that say on pay will actually mean something to someone. The recent mandatory say on pay pilot program for TARP companies shows that say on pay is practically meaningless. To date, out of all of the TARP companies that have given their shareholders a say on pay, not one of them has "lost" the vote. That's right, the shareholders of every TARP company so far have "approved" executive pay via the say on pay vote by votes of over 50% at each of these companies. And these are the companies that brought our financial system and the global economy to its knees. The votes were cast on the pay that was given out in the previous fiscal year, when all of this was happening. So, for all of the talk about shareholders not standing for executive compensation practices that incentivized excessive risk taking, we're seeing contrary results, and that's with 20-20 hindsight! One would have expected the say on pay vote to be overwhelmingly negative at places like Citi and Bank of America, but, for whatever strange reason, they weren't. I'm not saying that I agree with any of these votes or approve of the compensation policies, practices or amounts at any of these financial institutions, but apparently the shareholders, when given the opportunity, have not collectively raised a major objection. If that's the case, then what is the point of say on pay? If this is what the votes look like right after the meltdown, why does anyone think that say on pay is going to fix, or even slightly change, anything? I've got to think that the people who saw say on pay as the solution, or even part of the solution, to the executive pay conundrum are disappointed with what we are seeing in this initial experiment. For all of the time we have spent arguing about it, it ended up being a complete dud. Time to move on and work together to create something that will actually be useful to somebody (other than perhaps a politician).

Doug Chia, senior counsel and assistant corporate secretary, Johnson & Johnson


Say On Pay Part of Reform Proposal

As indicated this Pensions & Investments article and in Secretary Geithner’s statement compensation (included below), there has been a major breakthrough on the Advisory Vote, or say on pay. The Administration is supporting legislation on say on pay which would give the SEC the authority to require all companies to institute the Advisory Vote.

Clearly this is an important step forward in making this a reality, building on the hard work on many investors and a number of companies that have supported this reform the years.

The announcement comes at the end of a very active proxy season on executive compensation with close to 100 companies receiving Advisory Vote resolutions and votes averaging 47% with 18 companies receiving votes over 50% .

A number of pay consultants and conservative groups have begun criticism charging the government with ‘meddling’ in the compensation process. Ironically, say on pay does not provide for a role for government ( unless they are huge owners) but instead gives owners the platform for feedback.

Continue reading "Say On Pay Part of Reform Proposal" »


Letter to Strayer Education CEO Robert Silberman

In light of Gretchen Morgenson’s article in the New York Times featuring Strayer Education's CEO, Robert Silberman, here's a letter I sent to him congratulating him on his outreach to investors on pay issues.
– Tim Smith

May 19, 2009

Mr. Robert S. Silberman
Chief Executive Officer
Strayer Education Inc.

Dear Mr. Silberman:

     Walden Asset Management is a division of Boston Trust & Investment Management Company and together we own approximately 37,000 shares of Strayer Education.  It has been one of the top ten holdings in our small cap portfolio and we have been a long-term owner of Strayer shares.

     Our clients at Walden are concerned about environmental, social and governance issues (ESG) as well as a company’s business plan and financial performance. We consider Strayer to be a leader in ESG performance as well as a leader in your industry.

     We were very pleased to see you profiled in the Gretchen Morgenson story on “Say on Pay” in the Sunday New York Times.  Walden has been an active proponent of Say on Pay and has been in dialogue with scores of companies and a sponsor of shareholder resolutions with close to 20 companies.

Continue reading "Letter to Strayer Education CEO Robert Silberman" »


Seattle Times editorial: 'Bring it on'

A very positive editorial in the Seattle Times on the Advisory Vote:

Stockholders should demand a say on executive pay
Shareholders at Dow Chemical pass a "say on pay" measure – a proposal for monitoring executive pay. Other companies should do the same.


Prudential Shareholders Pass Say-On-Pay Proposal


Prudential Investors Approve Responsible Wealth Say on Pay Resolution

Boston, MA – At the 2009 annual general shareholder meeting of Prudential Financial on May 12, in Newark, NJ, company stockholders voiced their approval of a proposed “Say on Pay” vote on executive compensation. The proposal received a 61.5% majority vote, according to preliminary results.

William Creighton of Freeport, Maine submitted the proposal as a Prudential shareholder and member of Responsible Wealth, a project of United for a Fair Economy in Boston.  Responsible Wealth is a national network of 700 members who use their voices as upper-income taxpayers and shareholders to advocate for progressive tax policies and corporate accountability.

“This strong majority vote reflects the feeling of shareholders around the country that they want a voice on executive compensation,” says Mike Lapham, Project Director of Responsible Wealth. “While Prudential’s executives continue to receive lavish compensation packages, shareholders have seen the company’s stock plummet in recent months.  They want to have a say in the matter.”

Continue reading "Prudential Shareholders Pass Say-On-Pay Proposal" »


New 'Compensation Principles' from Goldman Sachs

On May 8, I had the opportunity to attend and speak at the Goldman Sachs stockholder meeting. Last year Walden Asset Management and other investors had filed a resolution seeking an Advisory Vote. It received a 46% vote. We refiled this year along with the Connecticut’s state pension fund and other shareowners, but withdrew the resolution when GS agreed to implement an Advisory Vote as required as a TARP recipient. 

Thus GS presented a resolution urging approval of their compensation package. It passed overwhelmingly with a 98% vote. During the discussion of the comp package, Lloyd Blankfein, the CEO, made a major statement presenting a new set of Goldman Sachs’ Compensation Principles. He noted these had roots in past thinking and practice but were newly created. He also noted the intense interest in executive pay and felt these principles would help respond to these public concerns.

It is my belief that having a vote on pay provided a platform for GS to address the issue at length – another way in which SOP has advanced significant dialogue with shareowners on pay.

Tim Smith, senior vice president and director of socially responsive investment, Walden Asset Management


Carpenters Proposal Submitted to P&G

Readers will be interested to see a new resolution filed by the Carpenters with P&G dealing with both an Advisory Vote and expanded communication process via a forum for investors on executive compensation. While proponents of SOP will continue to press for annual votes, they have also been supporting improved communications with investors.

Click here to read the proposal (PDF, 84Kb)

Tim Smith, senior vice president and director of socially responsive investment, Walden Asset Management


Comments from Andrew Clearfield, president, Investment Initiatives, LLC

The following comments on "Say on Pay" are from Andrew Clearfield, president, Investment Initiatives, LLC.

What is there to say? "Say on pay" is coming, whether you want it to or not. The powers that be in Washington are all in favor of it. It is also true that there have been wretched excesses at many quoted companies, and that most of the CEOs in question are in no way entrepreneurs, who risked their own futures in order to create the companies in question. Investors are angry, having seen the values of their holdings decline from 25% to 75% and more, and the man in the street can't understand why any executive should make more than he does, anyway. CEOs can at least take heart from the fact that the vote is entirely advisory – as is not the case in the Netherlands or in Sweden. Most institutional holders, who will constitute the majority of votes at almost all of the larger companies, are not opposed to the principle that those in charge of an enterprise be well paid for their labors. But – it's gonna happen, and all that will be achieved by fighting it is that some managers will become branded as anti-investor, some directors will be systematically opposed by activists, and it will be that much easier for the Administration and Congressional Democrats to brand Big Business as Public Enemy No. 1.

Comments from Alan Nadel, managing director, Strategic Apex Group LLC

The following comments on say on pay are from Alan Nadel, managing director, Strategic Apex Group LLC.

Many of us would be delighted if "Say on Pay" is all we get.  Based on a meeting I had yesterday [April 15, 2009] with a senior Senate staffer, it is very possible that we will be seeing new rules that are far more onerous than a simple shareholder advisory vote on executive compensation.


AFSCME Press Release: Say On Pay Shareholder Proposals Garner Record Support

Here is a press release prepared by AFSCME that went out today summarizing the growing support for the Advisory Vote and our belief that this will help Congress sense the interest of investors in this reform.
– Tim Smith

Monday, May 04, 2009

Say on Pay Shareholder Proposals Garner Record Support During Tumultuous Shareholder Season

Say on Pay shareholder proposals have gained new momentum in the wake of recent financial scandals, excessive compensation and shareholder anger at high profile corporations such as AIG, Bank of America and Citigroup.

Washington, D.C. – Say on Pay shareholder proposals have gained new momentum in the wake of recent financial scandals, excessive compensation and shareholder anger at high profile corporations such as AIG, Bank of America and Citigroup.

Continue reading "AFSCME Press Release: Say On Pay Shareholder Proposals Garner Record Support" »

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