Supplemental Info: Say on Pay and Dodd Frank 20100723

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This presentation answers questions asked during the live event July 23, 2010. It also provides additional evidence regarding Pay and Performance in the United Kingdom.

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Supplemental Info: Say on Pay and Dodd Frank 20100723

  1. 1. SUPPLEMENTAL
SLIDES
 Responses
to
ques6ons
posed
during
July
23
presenta6on
and
 supplemental
informa6on
on
UK
Pay
and
Index
Performance
Informa6on
 The
Real
Impact
of
Say
on
Pay
and
a
Brief
 Updated
from
the
Dodd‐Frank
Wall
Street
 Reform
and
Consumer
Protec@on
Act
 Hosted
by:
 
New
York‐New
Jersey
Chapter
of
the
NASPP
 July
23,
2010

  2. 2. Supplemental
Informa@on
 •  Responses
to
Ques@ons
Posed
 •  UK
Pay
and
Index
Performance
Informa@on

  3. 3. RESPONSES
TO
QUESTIONS
POSED
 Answers
provided
by:

 Ed
Hauder,
Exequity
and

 Dan
Walter,
Performensa@on

  4. 4. Q
&
A
 •  Q:
Any
concern
if
we
hold
our
annual
mee6ng
just
prior
to
the
six
month
 anniversary

of
the
signing
of
the
Act
so
as
not
to
be
subject
to
say
on
 pay?
 •  A:

 –  From
a
technical
perspec@ve,
there
shouldn’t
be
any
issue
as
the
Act
indicates
 mandatory
SOP
will
apply
to
proxies
for
the
first
shareholder
mee@ng
held
 aYer
the
end
of
the
6‐month
period
aYer
enactment
of
the
Act
 –  From
a
prac@cal
perspec@ve,
if
a
company
has
not
voluntarily
adopted
SOP
 prior
to
the
effec@ve
date
of
mandatory
SOP
under
the
Act,
it
is
unlikely
that
 shareholders
will
express
outrage
over
the
company
wai@ng
un@l
required
to
 include
a
mandatory
SOP
vote
at
its
annual
shareholder
mee@ng
the
following
 year.
 –  There
is
also
the
possibility
of
nega@ve
media
coverage
associated
with
what
 may
be
seen
as
an
avoidance
of
accountability
as
related
to
execu@ve
 compensa@on

  5. 5. Q
&
A
 •  Q:
Do
you
know
if
controlled
companies
are
exempt
from
the
 requirement
of
holding
a
say
on
pay
vote?
 •  A:
As
wri]en,
the
Dodd‐Frank
Act
does
not
include
a
specific
exemp@on
 for
controlled
companies.
However,
the
Act
does
give
the
SEC
the
 authority
to
“exempt
an
issuer
or
class
of
issuers
from
the
requirement… take[ing]
into
account,
among
other
considera@ons,
whether
the
 requirements…dispropor@onately
burdens
[sic.]
small
issuers.”
 –  It
seems
possible
that
the
SEC
would
exempt
controlled
companies
from
this
 requirement
for
reasons
similar
to
those
used
in
exemp@ng
controlled
companies
from
 certain
aspects
of
the
corporate
governance
rules
of
the
na@onal
stock
exchanges
and
 associa@ons.
But,
we’ll
have
to
wait
to
see
what
the
SEC
comes
out
with.
 –  Ac@on
Item:
If
you
are
a
controlled
company
or
control
a
company,
you
may
wish
to
 submit
comments
to
the
SEC
as
soon
as
possible
on
this
issue
in
order
to
ensure
the
SEC
 has
such
comments
before
it
begins
draYing
exemp@ons
for
SOP.

  6. 6. Q
&
A
 •  Q:
Will
ins6tu6onal
shareholders
generally
con6nue
to
vote
for
(i.e.,
in
 alignment
with)
their
porTolio
companies
on
Say
on
Pay
proposals
in
 order
to
protect
their
actual
and/or
poten6al
401K
or
other
business
 from
the
porTolio
companies?
 •  A:
While
business
reali@es
may
s@ll
creep
into
ins@tu@onal
shareholders’
 vo@ng
on
SOP,
it
is
important
to
realize
that
the
SEC
and
Congress
are
 probably
looking
for
a
clear
separa@on
between
votes
and
business
 interests.

Consequently,
while
the
prac@ce
could
s@ll
con@nue
with
SOP,
 we
expect
it
will
be
somewhat
muted,
and,
if
not,
that
the
poli@cians
may
 eventually
takes
steps
to
address.

  7. 7. Q
&
A
 •  Q:
The
new
requirement
to
report

rela6ve
pay
levels
of
the
CEO
against
“all
 employees”
–
how
likely
do
you
believe
this
will
pass
and
what
do
you
 believe
will
be
included
in
the
total
compensa6on?
 •  A:
This
requirement
is
included
in
the
Dodd‐Frank
Act
as
signed
into
law
by
 President
Obama
on
July
21,
2010.

See
slide
45
in
the
original
Presenta@on
 for
more
informa@on
about
what
is
required.

Keep
in
mind
that
“total
 compensa@on”
will
be
as
defined
for
purposes
of
the
Summary
Compensa@on
 Table
in
the
proxy.
This
alone
will
impose
a
heavy
burden
on
companies
with
a
 large
number
of
employees
and/or
mul@‐na@onal
opera@ons
to
gather
and
 determine
the
total
compensa@on
for
each
employee.

Companies
will
need
to
 determine
the
“total
compensa@on”
for
each
employee
other
than
the
CEO
so
 that
they
can
then
determine
the
median
amount
of
total
compensa@on
for
all
 employees.
 •  A:
Addi@onal
concerns
with
this
provision
include:
 –  the
a]en@on
this
ra@o
may
receive
from
the
press
and
the
push
for
explana@ons
that
may
 result
 –  Possible
issues
for
companies
who
provide
“total
rewards”
informa@on
to
their
employees,
 since
these
calcula@ons
are
sure
to
differ

  8. 8. Source:
Say
on
Pay,
Six
Years
On,
Lessons
from
the
UK
Experience,
a
 report
by
Railpen
Investments
and
PIRC
Limited
(September
2009)
 UK
PAY
AND
INDEX
PERFORMANCE

  9. 9. Source:
Say
on
Pay,
Six
Years
On,
Lessons
from
the
UK
Experience,
a
report
by
Railpen
Investments
and
PIRC
Limited
(September
2009)


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