Say-on-Pay: Changing How Executives Get Paid

Abstract

Legislative and regulatory activity is slowing down, and the Dodd-Frank Wall Street Reform and Consumer Protection Act rulemaking by the U.S. Securities and Exchange Commission continues to be much slower than expected. For example, companies have resisted CEO pay to average worked ratio disclosure as being too costly to implement. This and other Dodd-Frank rules seem to be caught in a tug of war between Congress and industry, with the SEC being caught in the middle. With regard to the non-binding “say on pay” (SOP) vote, companies are not required to take any specific action when faced with a negative vote. However, a public company is required to disclose in its proxy statement whether or not it has failed, and if so, how the company has responded to the results of the prior year say-on-pay vote in determining compensation policies and decisions. This article covers how SOP has changed proxy statements and disclosures.

Keywords: proxy statements, say-on-pay, disclosures, shareholders, Dodd-Frank, executive compensation, corporate governance