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Executive Comp: Say When

Companies are pushing back on the say-on-pay mandate by asking shareholders to stretch out the time between votes.

Sarah Johnson, | US
December 17, 2010

The frequency vote could be binding

Who says that the vote on the frequency of the shareholder votes on executive compensation is also non-binding? The language of the statute and its legislative history as well as the oral records from the conference committee where the frequency vote was introduced suggest that the vote could be binding. First of all the statute says in subsection (a) that the vote is "to determine" the frequency. While the language in the vote on executive compensation itself mentions that it is "to approve" the compensation of executives. Second the statute says in subsection (c) that the character of the vote (SINGULAR) and not voteS (PLURAL) in subsection (a) is intended to be nonb-binding. Third, the original House and Senate versions had a mandatory annual advisory shareholder vote on executive compensation. When Senator Crapo changed this during the conference committee he mention that the shareholders not federal law should "decide" on the frequency. Also the conference document about this change mentions nothing that suggests that the frequency vote was supposed to be non-binding. Surely a change from a mandatory annual advisory vote to a non-binding shareholder vote on the frequency of the advisory shareholder vote on executive compensation would have elicited some debate during the conference. However, there is no further discussion in the conference. I even think that chairman Dodd talked about this amendment as a technical issue. Anyhow, that's my two cents of legal analysis, but I am not a lawyer.

Posted by Guy Whowantsnoadvertis | December 25, 2010 09:08 am

Say on Pay Vote Frequency Tracking

For an up-to-date list of company recommendations regarding say on pay votes (or say when on pay) with links to the companies' proxy filed with the SEC, look at:

Posted by Edward Hauder | December 18, 2010 01:19 pm

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