Bloomberg BNA’s Corporate Law & Accountability Report is available on the Corporate Law Resource Center. This news service keeps corporate practitioners informed of legal developments of...
By Kelsey Penna
July 31 — As the 2014 proxy season comes to a close, results show that an overwhelming majority of shareholders at the largest U.S. public companies approve of their say-on-pay proposals.
That's according to Michael Hermsen, a Mayer Brown LLP partner in Chicago, speaking during a July 31 Mayer Brown webinar summarizing the 2014 proxy season.
Citing Institutional Shareholder Services Inc. figures, Hermsen said the say-on-pay proposals that shareholders have approved this season have received an average of 91.7 percent support. Moreover, out of the 2,229 say-on-pay proposals submitted so far this year, only 51 failed to win majority support.
Hermsen emphasized that these numbers could change because not all companies have held their 2014 annual shareholder meetings. If these results hold, however, they would mark a fourth straight year of positive say-on-pay results.
Investors still have concerns when it comes to a perceived inadequate relationship between pay and performance, lack of difficulty in achieving performance goals and problematic pay practices at a company, said Hermsen, a former assistant director of the Securities and Exchange Commission's Division of Corporate Finance. These concerns are generally company specific and haven't changed much during the last few years, he added.
Since the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 required nonbinding say-on-pay votes to approve executive pay at least once every three years, and the SEC adopted its corresponding rule thereon, investors have used the say-on-pay vote to communicate more with management.
Companies are more proactive in reaching out to shareholders outside of the proxy season, resulting in more meaningful dialogue about the concerns, Hermsen said. An ISS study released in April tied say-on-pay votes to a rising level of engagement between corporations and shareholders.
Pay ratio disclosures, clawbacks and hedging disclosure are other Dodd-Frank compensation requirements still awaiting final SEC action, said Laura Richman, counsel for Mayer Brown's corporate and securities practice.
It is unclear when the SEC will adopt these rules, but it is unlikely they will affect the 2014 proxy season. Some attorneys have said the SEC will propose clawback regulations later this year, but they will not take effect until mid-2015. The SEC has said it is targeting October to finalize its pay ratio rule.
To contact the reporter on this story: Kelsey Penna in Washington at email@example.com
To contact the editor responsible for this story: Ryan Tuck at firstname.lastname@example.org
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)