Presidio Pay Blog Providing Thoughtful, Strategic Advice for Critical Compensation Issues

Update on “Say on Pay”

The “Say on Pay” movement may lead to shareholders having a bigger voice on the metrics and mechanisms of executive compensation and their link to company performance.  There is wide support among institutional investors and shareholder advocacy groups for non-binding shareholder votes.

Recent happenings …

• Forbes sees President-Elect Obama’s sponsorship of a “say on pay” bill will likely lead to legislation requiring a “say on pay” shareholder vote beginning in calendar year 2010.
• RiskMetrics, formerly Institutional Shareholder Services (ISS) is tracking companies’ “say on pay” voting results.
• This Washington Post article discuss how government and shareholder pressure may lead to more companies adopting “Say on Pay.”

Presidio Pay’s thoughts …

We continue to advise our clients to provide as much transparency on their executive pay strategy and philosophy through both the proxy filing process and other communication opportunities with shareholders and employees, to the extent that it does not divulge key competitive business strategies.

While we believe the concept of “Say on Pay” has merit, our concern is that this process does not engage the Board, shareholders, and executives in a coordinated discussion on not only compensation but also its impact on overall company performance and strategy.