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A Tally of "Say When on Pay" Votes in 2011

(The following post originally appeared on ONSecurities, a top Minnesota legal blog founded by Martin Rosenbaum to address securities, governance and compensation issues facing public companies.)

January 18, 2012

With 2011 behind us, it’s interesting to look back at the results of public companies’ “Say When on Pay” shareholder advisory votes regarding the preferred frequency of Say-on-Pay votes, as required under the Dodd-Frank Act. Numerous commentators, including me, spent a lot of time last year “watching the scoreboard” last year – would companies recommend an annual, biennial or triennial vote, and how would the shareholders ultimately vote?

Mark Borges recently published his tally (as of year-end) of 3,149 companies’ proxy statements in his Proxy Disclosure Blog on (subscription site). According to Borges’ tally, these companies recommended as follows in their “Say When on Pay” shareholder advisory votes on frequency:

Annual Say-on-Pay vote recommendation: 1,686 companies (54%)

Biennial Say-on-Pay vote recommendation: 83 companies (3%)

Triennial Say-on-Pay vote recommendation: 1,297 companies (41%)

No recommendation: 83 companies (3%)

Borges also reported that, as of the end of the year, of the 1,270 companies where the Board of Directors has recommended that future Say-on-Pay votes be held every three years, 624 (49%) have seen their shareholders indicate a preference for annual "Say on Pay" votes. Interestingly, this means that at around half of the companies where the Board recommended a triennial vote, the shareholders went along with that preference, despite predictions that shareholders would overwhelmingly favor annual votes. Some of these companies represented special cases (majority of shares controlled by a handful of shareholders, etc.), but this does not explain the large number of cases where the triennial recommendation carried the day.

I would guess that we won’t hear much about Say When on Pay votes in 2012, because most companies have now made their decision about how often to hold their Say-on-Pay votes. However, I am still curious about two Say When on Pay questions:

  • For companies where the Board recommended a triennial vote but the shareholders expressed a preference for an annual vote in a close vote, will any of them try to achieve a different result with another Say When on Pay vote this year? Note that the Say When on Pay vote must be held at least once every six years, but there is no limitation on how often the vote may be held.
  • The shareholder advisory firm Glass Lewis last year stated that, where the Board of Directors recommended a triennial Say-on-Pay vote, they would look at these proposals on a case-by-case basis. This contrasts with the approach of ISS, which has a policy of always favoring an annual vote. Did Glass Lewis actually support any board’s recommendation for triennial votes?


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