Frequency Becoming Focus of Say on Pay Battle

by Gary Larkin for The Governance Center Blog, November 18th, 2010.

The battle over advisory Say on Pay votes at public companies, which will be in full force this spring, is coming down to frequency, rather than what’s in the plans themselves. In the last week alone, the topic has been hotly debated in a Governance Center Directors’ Institute Roundtable and a Conference Board Knowledge Series Webcast on new governance requirements.

Most likely, the reason for the focus on management say on pay (MSOP) frequency proposals was the Institutional Shareholder Services (ISS) release of its 2011 proxy voting policies for public comment late last month. The ISS, whose stature seems to grow as shareholders attempt to gain more access to proxies, issued its preliminary policies on Oct. 27 with an eye on publishing its final global policy summary and concise guidelines in late December. The ISS public comment period closed on Nov. 11.

Of the many policies included in the preliminary document, Say on Pay, specifically frequency, is among the most controversial. For the first time, ISS has decided it will “adopt a new policy to vote in favor of companies providing for annual MSOP proposals.”

The ISS’ reasons for this decision? “ISS supports an annual MSOP for many of the same reasons it supports annual director elections rather than a classified board structure: because it provides the highest level of accountability and direct communication by enabling the MSOP vote to correspond to the information presented in the accompanying proxy statement for the annual shareholders’ meeting.” (continue reading… )



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