Pay-Related Resolutions Focus on Holding Periods, Vesting

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By Che Odom

April 13 — Executive compensation-related shareholder proposals are focused this year on holding periods and acceleration of vesting, though the overall number of resolutions continues to be down, corporate attorneys said April 12 at a conference in New York.

The best way to handle such resolutions is through engagement, Ron Prague, executive vice president and general counsel of Synchronoss Technologies Inc., said at the Association of Corporate Counsel's mid-year meeting. “It is important to get feedback from a majority of your top shareholders” ahead of votes on compensation.

Shareholders, including the AFL-CIO, have filed proposals asking that executives be required to retain a number of shares for a set amount of time after the vesting of stock or exercise of options . Other proposals focus on barring the accelerated vesting of awards when the company experiences a change in control, such as when the issuer has been acquired by another company .

“Simply because you receive a shareholder proposal” doesn't mean that the proposal ultimately will end up on the company's proxy, Prague said.

Management should try talking with the proponent, explaining the reasons for its compensation practices, Prague said. Outside counsel also should be consulted to decide on the best response, which may include seeking authority from the Securities and Exchange Commission staff to exclude the shareholder proposal from the company's proxy materials, he said.

Fewer Proposals

The number of executive compensation proposals have decreased in the wake of the SEC's say-on-pay rule, which allows shareholders an advisory vote on corporate pay packages .

Susan Szafranski, associate general labor, employment and benefits counsel at PSEG Services Corp., observed that in-house counsel spend a great deal of time fine-tuning the language and presentation of proxy materials and the compensation discussion and analysis section of annual reports.

When new officers and attorneys join the company, have them review these disclosures to get a “fresh perspective,” she suggested.

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To contact the editor responsible for this story: Yin Wilczek at