Views on improving the integrity of global capital markets
27 January 2011

With “Say on Pay” Imminent, Issuers Need Better Communication, Investors Better Guidance

According to a recent Towers Watson survey of 135 U.S. publicly traded companies, 51 percent expect to hold annual “say-on-pay” votes, while 39 percent prefer a vote every three years and 10 percent anticipate biennial votes.

Interestingly, nearly half of the survey respondents (49 percent) don’t know what level of favorable shareholder say-on-pay votes will be considered a successful outcome by their boards.

According to Towers Watson senior consultant James Kroll, “The survey responses suggest that companies are struggling to understand the implications of say-on-pay votes and many are taking a wait-and-see approach to measuring success.”

As the survey responses illustrate, there is clearly a disconnect — investors need better information about executive compensation while issuers need better communication tools to provide investors the information they need.

In the coming days — and just in time for the arrival of say-on-pay votes as part of the Dodd–Frank Wall Street Reform and Consumer Protection Act — CFA Institute will reveal a tool that will allow issuers to provide the kind of concise and meaningful information investors need to make informed decisions on executive compensation in general, and say-on-pay in particular.

Watch this space for more information in the coming days.

About the Author(s)
Matt Orsagh, CFA, CIPM

Matt Orsagh, CFA, CIPM, is a senior director of capital markets policy at CFA Institute, where he focuses on corporate governance, ESG, and climate change analysis. He writes and speaks frequently on these topics on behalf of CFA Institute. His paper, Climate Change Analysis in the Investment Process was named “Best ESG Paper” by Savvy Investor in 2021.

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