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Forum Report: “Say-on-Pay”
and “E-Meetings”
Responding to Investor Information
Requirements
Marketplace Adaptations
Regulatory Processes
The Shareholder Forum’s public interest programs for both “Say
on Pay” and “E-Meetings”
have ultimately focused on the same objective: improved communication
between investors, who need information for their capital allocation and
voting decisions, and corporate managers, who need to understand and
respond to their investors’ decision-making interests.
This essential communication objective will require both marketplace and
regulatory support.
Marketplace Adaptations
Participants in the Forum’s
special project for marketplace practices have prioritized the
development of two processes for availability in time to support 2011
investor communications:
► Independent
Shareholder Verification – Responding to the need for “reasonable
verification” of beneficial stock ownership as a foundation for
shareholder communication rights, the Forum has partnered with a
technology company to make an independent process available to companies
or their selected registrars. The technology has been successfully tested,
as
reported last month. We plan to work with a few corporate users and
service providers to develop application features and have it available
for simple integration into any online communication process by December.
► Investor
Surveys – The Forum’s development of investor survey methodologies
has made it possible to use this kind of quantitative research as a
foundation for understanding and responding to investor interests. We will
be defining practical service requirements in workshops to make investor
survey research broadly available by January, either directly to those
with internal market research expertise or through partnering
professionals.
Anyone interested in either of these processes is welcomed to inquire
about participation in their development.
Regulatory Processes
Those of you concerned with the definition of regulations supporting
informed decision-making are encouraged to respond to either or both of
two SEC invitations to comment.
As
reported last week, the SEC has invited comments relating to its
consideration of proxy system reform. The administrative processes of
“proxy plumbing” are critical to effective information exchange between
companies and their investors, and it is important that the SEC understand
the priorities of the ultimate corporate and investor “users” of the
information as well as the interests of the service providers supporting
the communications. The SEC has asked that comments on proxy reform be
submitted by today.
Addressing the Dodd-Frank provisions for “say-on-pay” and related voting
and disclosure requirements, the SEC has now published its proposed rules
for comment as summarized in the following press release (with links to
the proposed rules):
■ October
18, 2010, U.S. Securities and Exchange Commission press release: "SEC
Proposes Rules on "Say on Pay" and Proxy Vote Reporting"
While some of you who had advocated selective adoption of company-specific
advisory voting as it was
initially presented in 2006 may be disappointed with the politicized
transformation of “say-on-pay” into a mandated universal process, it is
important now to accept the legislated requirements and focus on what
should be done to make good use of the process. At the very least, this
imposition of responsibilities on millions of investors to vote on pay at
thousands of companies can benefit the marketplace by stimulating more
effective delivery and analysis of decision-making information. That is
something all of us want.
GL – October 20, 2010
Gary Lutin
Chairman, The Shareholder Forum
c/o Lutin & Company
575 Madison Avenue, 10th Floor
New York, New York 10022
Tel: 212-605-0335
Email:
gl@shareholderforum.com
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