June 25, 2010
The House-Senate Reconciliation Reaches the Finish Line: The “Proxy Access” & “SOP” Results Are In
– Broc Romanek, CompensationStandards.com
Racing to an artificial deadline, the House-Senate conferees worked into the wee hours this morning (5:39 am!) to finalize numerous open provisions in the RAFSA (renamed “The Dodd/Frank Act“?), much of it behind closed doors despite the decision to televise the negotiations on C-SPAN. Once again, thanks to Ted Allen of ISS who blogged along the way yesterday to give us the lowdown on the finalized corporate governance items that were still outstanding (we’ll have to wait to see the final bill to fully realize what transpired, that likely will take a few days):
– No majority vote standard required
On other open items, some answers are provided in this Washington Post article – and this Morrison & Foerster scorecard.
I got this from a member yesterday: In this late 2007 letter, a group of Senators lobbied then-SEC Chair Cox to head off the SEC from considering the use of a 5% shareholder ownership requirement because it would “…effectively bar most shareholders from ever filing such proposals…This threshold should be eliminated.” Yet that exact same threshold is what some – but not all – of these same senators argued for this week over the objection of House conferees. Just another day in Washington.
More on “My Ten Cents: Say-on-Pay”
On “The Corporate Library Blog,” Paul Hodgson blows off some steam about the decision to allow flexibility beyond one year for SOP. Although not having an annual SOP certainly means less work for our community of board advisors, is it really a good thing for Corporate America? During an “off-year” when SOP is not on the ballot, shareholders may well choose to vent frustration over a company’s pay package by voting against re-election of the compensation committee (or the full board). Not a good result for them.
Plus my reaction is a bit different than Paul’s because I still believe that say-on-pay has the potential to derail the progress towards responsible pay as boards at the numerous companies who inevitably will receive support from 90-plus percent of their shareholders will think that they are doing a great job in setting pay, even though some of their processes are still broken (eg. the heavy reliance on peer group benchmarking). I don’t like SOP much at all.
In other words, most boards should be thanking their “lucky stars” for say-on-pay because it gives them cover, both reputationally and probably also from liability. Given that, I’ll never understand the knee-jerk reaction from the corporate community to oppose SOP so vehemently as I’ve blogged before. On the other hand, maybe companies do have a reason to be scared of SOP since three companies failed to obtain majority support for their MSOPs over the past month…