Susan Wetzel in Financial Times' Agenda Newsletter: Boards Get Ahead of Say-on-Pay Legislation

11/12/2009

A majority of corporate directors are taking action in anticipation of a say-on-pay policy at their companies. A “wait and see” approach isn’t proactive enough, many directors say, according to a recent Agenda survey.

Twenty-nine percent of corporate directors are planning for say on pay by keeping themselves informed of the latest developments, while an almost equal number, 28.5%, say they are focused on making sure there are no perceived poor pay practices if and when Congress mandates say on pay.

Susan Wetzel, chair of the Employee Benefits and Executive Compensation practice group at Haynes and Boone, says some Boards Get Ahead of Say-on-Pay Legislation companies are adopting modified versions of say on pay in hopes that “maybe if we all just agree to do it, it won’t happen from Congress.”

It could be a smart move. Triennial or biennial say on pay would be a less costly option for issuers, and some shareholders argue it would be easier for them to thoroughly cast a vote on compensation if that vote didn’t take place every year. However, Wetzel notes that this strategy may backfire. “I don’t know if that philosophy will actually work because our legislators seem to be pretty hot on say on pay,” she says.

This excerpt is from Financial Times' Agenda executive compensation newsletter.

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