SEC Guidance on Say-on-Pay Proposals

On February 17, 2012, in News, Proxy Disclosure, Say on Pay, by Ed Hauder

On February 13, 2012, the SEC gave everyone a nice pre-Valentine’s Day present, a new C&DI on say on pay proposals.  I thought it might be helpful for folks to see the current C&DIs on the topic, so here they are, the one released this week is listed at the bottom.

Question 169.04

Question: Must the vote on say-on-frequency, as required by Rule 14a-21(b), be in the form of a “resolution”?

Answer: No. [Feb. 11, 2011]

Question 169.05

Question: Is it permissible for the say-on-pay vote to omit the words, “pursuant to Item 402 of Regulation S-K,” and to replace such words with a plain English equivalent, such as “pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the compensation tables and any related material disclosed in this proxy statement”?

Answer: Yes, it is permissible to use a plain English equivalent in lieu of the words, “pursuant to Item 402 of Regulation S-K.” [Feb. 11, 2011]

Question 169.06

Question: Is it permissible for the say-on-frequency vote to include the words “every year, every other year, or every three years, or abstain” in lieu of “every 1, 2, or 3 years, or abstain”?

Answer: Yes. [Feb. 11, 2011]

Question 169.07

Question: On its proxy card and voting instruction form, how should a company describe the advisory vote to approve executive compensation that is required by Exchange Act Rule 14a-21?

Answer: The following are examples of advisory vote descriptions that would be consistent with Rule 14a-21’s requirement for shareholders to be given an advisory vote to approve the compensation paid to a company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K.

    • To approve the company’s executive compensation
    • Advisory approval of the company’s executive compensation
    • Advisory resolution to approve executive compensation
    • Advisory vote to approve named executive officer compensation

The following is an example of an advisory vote description that would not be consistent with Rule 14a-21 because it is not clear from the description as to what shareholders are being asked to vote on. Shareholders could interpret this example as asking them to vote on whether or not the company should hold an advisory vote on executive compensation, rather than asking shareholders to actually approve, on an advisory basis, the compensation paid to the company’s named executive officers.

    • To hold an advisory vote on executive compensation

[Feb. 13, 2012]

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