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Note: Although Schering-Plough subsequently agreed to be acquired by Merck, they nevertheless conducted the survey on the sold company's report of past executive compensation. For their summary of survey results and the form that was delivered to shareholders with the proxy statement, see |
October 24, 2008 Forum Report:
Survey Alternative to Proxy Voting on Executive Compensation
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From:
Gary Lutin
Sent: Friday, October 24, 2008 7:24 PM
Subject: Statement clarifying Schering-Plough's commitment
Referring to her announcement presented below,
Susan Wolf of Schering-Plough has asked me to report that "this action is
purely voluntary and was not negotiated in response to any proposal or
pressure."
GL
Gary Lutin
Lutin & Company 575 Madison Avenue, 10th Floor New York, New York 10022 Tel: 212-605-0335 Email: gl@shareholderforum.com
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----- Original Message -----
From:
Gary Lutin
Sent: Friday, October 24, 2008 5:04 PM
Subject: Negotiated alternative to proxy voting on executive
compensation
Copied below are a cover note and announcement
by Schering-Plough of their negotiated commitment to conduct another
shareholder survey, this time relating to compensation issues, and a
response provided by Timothy Smith of Walden Asset Management.
It should be noted that this commitment was
developed independently of the Shareholder Forum. Individuals to
whom Schering-Plough sent its note below are addressed as the writer's
"Governance Colleagues," unrelated to any participation in the Forum.
The Forum will of course continue to address
the related issues, including those raised by Mr. Smith about (a)
communicating with all rather than selected shareholders and (b) the
questionnaire alternative to a more formal proxy vote. Your comments will
be welcomed.
GL
Gary Lutin
Lutin & Company 575 Madison Avenue, 10th Floor New York, New York 10022 Tel: 212-605-0335 Email: gl@shareholderforum.com
From:
Wolf, Susan
To:
Abe Friedman ;
Alex Kelly ;
Andrew Letts ;
Ann Chapman
; Ann Yerger ;
Anne C. Beal ;
Beth Young ;
Bill McGrew ;
Bob Pieroni ;
Bradley J. Webb ;
Broc Romanek ;
Carin Zelinko ;
Cathy Friedman ;
Cathy Rowan
;
cherman@omiusa.org ;
Claire Regan
;
ColleenScanlon@catholichealth.net ;
Cornish
F. Hitchcock ;
Craig Rhines ;
Damon
Silvers ;
Ed Durkin ;
Eric
Roiter ;
Glenn Booraem ;
heinonenv@juno.com ;
Hye-Won
Choi ; John
Chiang ;
John Wilcox ;
Joseph Grundfest ;
Julie Tanner ;
Kayla Gillan ;
kcoll@che.org ;
lberry@iccr.org
;
Laurence Hazell ;
Laurie Thiel
; Linda
Crompton ;
lscottmv@aol.com ;
Linda Selbach ;
Lisa Campros ;
Loretta Chan ;
Lynn
Turner ;
M. Benny Hernandez ;
Margaret Weber
; Marjorie
Fine Knowles ;
Mark Brockway ;
Martha Carter ;
Mary Collins ;
Mary Morris ;
nminow@thecorporatelibrary.com ;
nnarine@iccr.org ;
Nora Nash
;
Patrick McGurn ;
Paul Hodgson ;
Peter Mixon ;
Rich
Koppes ;
Richard Ferlauto ;
Richard
Metcalf ;
Robert McCormick ;
Seamus P.
Finn ;
Shawn Johnson ;
Shirley Westcott ;
Steve
Abrecht ;
Steve
Wallman ;
Susan
Hall ;
susansmakos@cinci.rr.com ;
svickers@chw.edu ;
Ted White ;
Tim Smith ;
Tmccaney@osfphila.org ;
Tracy Stewart ;
Vidette Bullock Mixon
Sent: Friday, October 24, 2008 4:01 PM
Subject: announcement say on pay survey
Dear Shareholders and Governance
Colleagues,
Please see the attached announcement of
Schering-Plough's commitment to conduct a say-on-pay survey.
Call if you have questions.
Regards,
Susan
Susan Ellen Wolf Schering-Plough Announces A Shareholder Survey On Director and Executive Pay
Kenilworth, New Jersey, October 24, 2008. -- Schering-Plough today announced that it will undertake a shareholder survey on director and executive pay.
The survey will be mailed to shareholders with the proxy materials for the 2009 Annual Meeting of Shareholders. The survey results will be discussed in the Compensation Discussion and Analysis section of the proxy statement for the 2010 Annual Meeting of Shareholders.
Schering-Plough believes its compensation program allows it to attract and retain a top management team with deep experience in the pharmaceutical industry, and, because pay moves up and down with company performance, motivates the team to provide long-term high performance. This survey will provide shareholders’ views of the current program, which will inform future work of the Compensation Committee and the Board.
“This survey is evidence of our commitment to seek and consider shareholder input, as we did in 2006 with the shareholder survey on majority voting for directors” said Pat Russo, Chair of the Nominating and Corporate Governance Committee of the Board.
“We believe it is important to have an attitude of continuous improvement in our governance and compensation practices, even when the actions we take are well beyond the requirements at that time,” said CEO Fred Hassan. Schering-Plough has taken many other voluntary steps to enhance governance and compensation since Hassan was named CEO in 2003, including:
Rich Koppes, currently at Stanford Law School and formerly General Counsel of the California Public Employees’ Retirement System (CalPERS), will provide oversight of the process used to tabulate and report the survey results. He also will serve as the conduit for shareholders wishing to respond to the survey on a confidential basis.
Comment in Response to Schering Plough Announcement Establishing a "Say on Pay Questionnaire" for its Investors
Timothy Smith - Senior Vice President Walden Asset Management
"Schering Plough's decision, announced today, to send a questionnaire to all shareowners with is proxy statement next spring requesting feedback on its executive compensation philosophy and package is another act of corporate governance leadership by the company.
Instead of passively awaiting comments by its investors or reaching out to a limited number of major shareholders, Schering Plough has developed an extensive program of outreach to gauge investor reaction on their executives' compensation and will integrate that input into their Board Compensation Committee deliberations.
Unfortunately the company stopped short of instituting an official Advisory Vote for shareowners which would be a perfect complement to the questionnaire.
Of course it is vitally important to gather information and feedback from investors, but the time has come to allow shareowners an official vote on executive compensation just as we vote to elect Directors and ratify auditors.
The present economic crisis is an urgent reminder of the need to have additional checks and balances on executive compensation and an Advisory Vote is one important tool for investors to provide checks and balances to compensation packages that reward pay for non performance for example.
We fully expect the new Congress to establish an Advisory Vote through legislation as they address compensation issues. We believe corporate governance leaders should demonstrate statesmanship and forward looking vision and adopt advanced programs like Schering Ploughs combined with an Advisory Vote"
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