Emotions may come into play also because shareholder voting on executive pay has become a populist issue, noted Mark Poerio, global executive compensation and benefits practice leader at the law firm Paul, Hastings, Janofsky and Walker. That could boost the chances for the pending legislation to pass, he noted disapprovingly.
"In theory, next year there will be another hot issue and Congress will pass another law that says shareholders have to approve overseas investments, or outsourcing, or some other hot issue of the day," Poerio said.
Hodgson, though, said the legislation is unlikely to go anywhere. "There will be an awful lot of lobbying going on, so I'm not sure how much success there will be getting it through the Senate."
Give 'Em the Boot?
The question remains, though: What's wrong with holding the compensation committee responsible for excessive compensation by withholding votes for their continued presence on the board?
"Say on Pay doesn't solve the significant compensation problem in this country, which is the directors who approve problematic pay packages," Elson said. "The fact of whether or not you supported the package doesn't cure the poor oversight. If you don't like what directors have done, replace them."
Others see that as an unacceptably aggressive. Choi called it "the nuclear option, if you will." AFSCME's Ferlauto said booting board members "is a sledgehammer, where a scalpel might be more appropriate, at least initially."
If there's a well-functioning board that's good at strategic planning and has the right mix of talent and experience and there are objections to the way pay is used, "do you really want to vote those people out?" Ferlauto said. "What you want to do is send a message to the compensation committee that you're voting against the problem itself, which is the pay."
Crystal Ball
Assuming the legislation doesn't pass, what is the likely course for the Say on Pay movement?
"I think it's a blip," said Dolmat-Connell. "Certainly you're not going to see the vast majority of public companies doing it." He acknowledged, though, that as many as a few hundred, mostly large companies might end up with shareholder advisory votes.
Countered Ferlauto, "The ball is rolling. We're getting stronger support this year. I think companies are going to feel pressure that if they don't move voluntarily toward adoption, there is legislation that may be less flexible for them."
Johnson couldn't help but agree, despite his antipathy for Say on Pay. "After Sarbanes-Oxley, it's one more nail in the coffin for being a public company in the U.S.," he said, "but I think it will come — slowly, but it will come, because it's politically correct."
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