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.