On January 25, 2011, the SEC finalized its regulations regarding shareholder influence on executive compensation practices. This action referred to as “SAY-ON-PAY” is required by all U.S. public companies (over $75M in market float). This is a non-binding advisory vote of the shareholders, but the implications on how the shareholder’s regard the company’s executive compensation can be significant.
The SEC is requiring two votes:
- “SAY-ON-PAY” — This is a simple APPROVE OR DISAPPROVE of the company’s total compensation program for the Named Executive Officers.
- “SAY-ON-WHEN” — This is a vote to determine how often the Say-on-Pay will be put to a shareholder vote. The choices are:
- Annually
- Bi-annual (every 2 years)
- Tri-annual (every 3 years)
As of early February, most Boards were recommending a 3 year SAY-ON-WHEN cycle, but shareholders are voting for 1 year cycle. However, over 95% of the shareholders were voting to APPROVE the company’s executive compensation program.
To learn more about this issue, please see the attached presentation, given by the Wilson Group in a Webinar sponsored by WORKSCAPE on March 24, 2011. Or, contact us if you would like to discuss your situation further. We are here to help.