American Financial Printing can help you with your company’s proxy statement
Say-On-Pay refers to shareholder approval of executive and golden parachute compensation. Section 951 of the Dodd-Frank Act requires public companies subject to the federal proxy rules to:
– Provide their shareholders with an advisory vote on executive compensation, generally known as “say-on-pay” votes.
– Provide their shareholders with an advisory vote on the desired frequency of say-on-pay votes.
– Provide their shareholders with an advisory vote on compensation arrangements and understandings in connection with merger transactions, known as “golden parachute” arrangements. Such golden parachute arrangements would need to be disclosed in merger proxy statements.
This policy was implemented in response to complaints about directors being allowed to pay themselves especially when CEO compensation was rising in large percentages while shareholder returns came in well below the returns of similar companies. Institutional Shareholder Services (ISS), which advises investor clients on proxy and shareholder issues in the U.S., recommended nay votes on pay for 293 companies so far this year. Company Boards will now need to know their shareholders and communicate with them ahead of time to explain the reasoning behind the compensation packages. They will also have to anticipate negative recommendations by the ISS and try to counter them.
Proponents argue that say-on-pay will ensure that executive pay reflects the company earnings and that board members fulfill their fiduciary duty. They also believe that it will strengthen the relationship between the board of directors and shareholders.
Opponents contend that say-on-pay does not effectively monitor compensation, and consider it reactionary rather than proactive. They believe that it is counter-productive because it diminishes the authority of the Board of Directors.
What do you say on pay?