The triennial say-on-pay proposal, advanced last year by Ed Durkin, director of corporate affairs at the United Brotherhood of Carpenters, calls for non-binding votes on executive pay every three years, with more frequent votes if companies fail to meet certain compensation disclosure and structure mandates.

Durkin says that earlier reports that he had completely withdrawn the proposal did not tell the full story.

“We’re still working the political process,” he says.

The carpenters union is now searching for an ally in the Senate who can advance the triennial proposal as a legitimate substitute for Frank’s annual say-on-pay legislation.

“We need a champion in the Senate,” Durkin says, adding that ideally that senator will be “on the majority side.”

Delays in the Senate, where banking committee chairman Chris Dodd (D-Conn.) has vowed to develop a full corporate governance bill, have reignited the debate over what version of say on pay is best for both corporate governance and shareholder interests.

Durkin claims that the carpenters union has recently been getting inquiries about triennial say on pay from “dozens” of companies, and his office is now “considering” reissuing the triennial plan originally put out to review to 21 corporations this past spring.

Experts say the plan may still need some adjustments to be economically as well as politically acceptable. “Some version of say on pay is going to pass,” says Professor Jeffrey Gordon at Columbia Law School. But he suggests that no single version of say on pay should be mandated, since different companies have different compensation environments. “I hope the exempting authority [allowing special considerations for certain companies] will remain in whatever version passes.”

Durkin is conciliatory on such points, but remains convinced that triennial is the best shareholder pay vote structure.

“Companies should step up without our prompting,” he says, noting that the triennial plan “invites a more thoughtful evaluation of executive compensation.”

The board of directors at Microsoft— one of the 21 companies that reviewed the carpenters’ original proposal — passed its own version of triennial say on pay on Sept. 18. The first vote will occur at the company’s annual shareholders’ meeting on Nov. 19.

In mid-October, a new player in the say-on-pay process stepped forward when Prudential’s board approved a biennial say-on-pay plan, which will become effective at the company’s annual meeting in 2010. According to a statement issued by a company spokesman, the non-binding vote plan covers “overall executive compensation policies and procedures employed by the compensation committee for Prudential’s named executive officers every other year.”

Last week, Jeremy Goldstein and Christina Cheng of Wachtell, Lipton, Rosen & Katz sent out a client memorandum suggesting that the Microsoft plan could “reinvigorate” the triennial alternative. They point out that triennial say on pay allows shareholders, directors and managers “to evaluate the effects of a company’s pay program on long-term performance and would be less likely to subject a company’s compensation plans to the whims of hedge funds and other constituencies seeking to apply pressures unrelated to long-term corporate performance.”

Durkin points out that the Microsoft triennial plan differs from the Carpenters’ because Microsoft would hold only a single non-binding shareholder vote every three years, whereas the carpenters’ version provides for subsidiary votes on annual pay, long-term incentives and post-employment compensation.

“Triennial is more than just a three-year vote,” says Durkin.

But he faces an uphill battle, with significant opposition from shareholder advocates as well as directors. Broc Romanek, editor of TheCorporateCounsel.net, says the “weakness” of the triennial approach is that it would not allow shareholders to have input “to deal with corporate implosions between the triennial votes.”

Rep. Gary Peters (D-Mich.), who has been a key player in moving say-on-pay legislation in the House, argues that the three-year plan is not practical. “Executive compensation packages are determined on an annual basis, so it makes sense that shareholders should have the opportunity to weigh in on executive pay annually,” the congressman said in a written statement.

Some thoughtful corporate insiders such as Arthur Martinez, chairman of HSN, director at American International Group, Pepsico and Liz Claiborne and lead director at International Flavors & Fragrances, say that regardless of how the competing plans are dealt with, the debate raises key issues of governance that need more urgent attention. “Say on pay may be a stalking horse for a much larger issue,” he says. “That is the loss of confidence in boards of directors and the corporate governance system.”