Two Different Approaches to “Say When on Pay”

by Ted Allen for The RiskMetrics Group, December 6th, 2010.

The first U.S. proxy statements with a mandatory “say on pay” vote and a separate vote on the frequency of future votes were filed on Monday and provide an early look at how companies will address “say when on pay” votes during the 2011 proxy season. Under the Dodd-Frank Act, companies must hold an advisory vote on compensation at their first shareholder meeting on or after Jan. 21, 2011, and ask investors to indicate whether they prefer annual, biennial, or triennial votes. Both the “say on pay” and the “say when” votes are non-binding.

Two of the first companies to release proxy statements with frequency recommendations have taken different approaches to this issue. One company, Torvec, a Russell 3,000 firm based in Rochester, New York, is advising its investors to support an annual vote on compensation at its Jan. 27 annual meeting.

“[T]he board of directors has determined that shareholders should have an annual opportunity to provide input on our named executive officer compensation programs and policies. The board’s determination was based upon the premise that named executive officer compensation is evaluated, adjusted and approved on an annual basis by the board upon a recommendation from the Governance and Compensation Committee and the board’s belief that investor sentiment should be a factor taken into consideration by the Committee in making its annual recommendation,” the automotive technology company said in its proxy statement. (continue reading… )


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