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The “Say on Pay” Frequency Vote

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“Say On Pay” Frequency Vote Recommendation

Annual Vote
60 companies
as of January 15, 2011
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Biennial Vote
13 companies
as of January 15, 2011
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Triennial Vote
120 companies
as of January 15, 2011
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No Recommendation
12 companies
as of January 15, 2011
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Background

New Section 14A(a)(2) of the Securities Exchange Act of 1934 requires that, not less frequently than once every six years, a company include in the proxy or consent solicitation materials for its annual meeting of shareholders a separate resolution subject to shareholder vote to determine whether the shareholder advisory vote on executive compensation required by new Section 14A(a)(1) of the Exchange Act (the “Say-on-Pay Vote”) will occur every one, two, or three years.

Like the Say-on-Pay Vote itself, this “Frequency Vote” is not binding on the company or its board of directors, and may not be construed as:

  • overruling a decision by the company or its board of directors;
  • creating or implying any change in the fiduciary duties of the company or its board of directors; or
  • creating or implying any additional fiduciary duties for the company or its board of directors.

Similarly, the Frequency Vote is not to be construed as restricting or limiting the ability of shareholders to make proposals for inclusion in the company’s proxy materials related to executive compensation.

As contemplated by the Securities and Exchange Commission (the “SEC”), companies must structure the Frequency Vote to give shareholders four choices: whether the Say on Pay Vote will occur every year, every two years, or every three years, or to abstain on voting on the matter. While a company is permitted to include a recommendation as to how shareholders should vote on the frequency of future Say-on-Pay votes, it must make clear in these circumstances that the proxy card provides for four choices (every one, two, or three years, or abstain) and that shareholders are not voting to approve or disapprove the company’s recommendation.

All companies must conduct a Say-on-Pay Vote and a Frequency Vote at their first annual meeting of shareholders that occurs on or after January 21, 2011. Thereafter, subsequent Say-on-Pay Votes are to be held as each company chooses, subject only to its decision whether to abide by the results of its Frequency Vote and the overall requirement that such a vote be held at least once every three years.

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View Biennial Vote list »
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View No Recommendation list »