​​​​Binding Say on Pay


  • 2014.April.09  "European Commission Proposes Binding Say-on-Pay" (Wall Street Journal) discusses this European Commission Report that would reportedly "require shareholders in each company to set an upper limit on directors’ average pay. Companies would have to submit their remuneration policy to shareholders for a vote every three years."
  • 2012.Feb.6  "Unease with say on pay" (Pensions & Investments), setting forth the following concerns with binding board to the say on pay votes by shareholders: (1) "Majority votes overturning pay policies negotiated with senior management by the corporation's board could run up against issues of contract terms and law." (2) "Further, the binding vote might make shareholders reluctant to use their power, for fear of triggering unintended consequences. They might fear limiting the board's ability to design competitive pay packages that align executive compensation with shareholder interests, driving out competent, experienced top management, and generally causing corporate disruption."


  • 2012.Dec.20  "Two Strikes" Rule Working [in Australia], with Glass Lewis reporting "Although over 100 companies faced the grim prospect of a “second strike”, only 13 companies actually received a “second strike” in the recently completed Australian proxy season (and only 2 had their board spill resolution approved). This seems to indicate that shareholders are taking this newly-granted responsibility quite seriously. Furthermore, companies are as well , as indicated by the increased dialogue and subsequent policy and design reform."
  • 2011.Oct.24  "Two strikes’ law for shareholders, but will it curb executive pay?" (the Conversation), reporting that "Under the new amendment to the Australian Corporations Act, if 25% or more of votes cast at two consecutive AGMs oppose the adoption of a remuneration report, then the company must formally respond by asking all board members except the managing director to stand for re-election within 90 days.


  • 2012.Feb.29  "Belgian Companies to Hold Say-on-Pay Votes This Year" -- ISS Blog, stating that: "The Law on Corporate Governance and Executive Remuneration of April 6, 2010, also provides for best practices on severance pay and on variable pay. If companies want to deviate from these guidelines (i.e., give executives "golden parachute" payments in excess of 18 months of total pay, focus variable pay on short-term rewards, or provide variable remuneration to independent directors), they will need to put the deviation to a binding shareholder vote."  


  • 2014.Jan/Feb  "Why Canada should adopt binding say on pay" - This comprehensive article from the Ivey Business Journal discusses and critiques Canada's voluntary say-on-pay voting regime, concluding that Canada lags behind other countries and ought to adopt mandatory say on pay.


  • 2013.Feb.16   Add Switzerland for More Shareholder Say over Exec Pay.  A recent Bloomberg article (title beginning "Fat Cat Pay") begins as follows: "Swiss company chief executive officers, including Roche Holding AG’s Severin Schwan and Nestle SA’s Paul Bulcke, earn some of the world’s highest salaries. That may soon change. With more than 100,000 Swiss citizens having signed a petition to limit “fat-cat” pay, voters will decide at a March 3 referendum whether top executives should have their compensation set by shareholders. While a poll shows a majority may vote yes, the industry’s lobby group warns that it will drive out tax-paying companies and is campaigning for a softer counter proposal."


  • 2014.May.24  "Kentz suffers first-ever binding defeat on executive pay" -- This Financial News article reports not only the lost vote at this mid-cap construction company (perhaps due to sizable discretionary bonuses), but also significant negative votes at several other companies.  
  • 2013.Jan.5  "Binding" Say on Pay - Locked on the Radar Screen. The UK has taken the lead with its rules that take effect this year. A recent Wall Street Journal poll shows over 80% of 10,000+ readers support this initiative, indicating a level of popular support that makes this initiative likely to cross the Atlantic within a year or two.
  • 2012.04.27  Binding Say on Pay - Yea for Transparency; Nay for Shareholder Approval.  Today, a UK-USA team of Paul Hastings LLP attorneys filed comments in response to the UK government's binding say on pay proposal.  While generally supporting transparency in the disclosure of executive remuneration, the comment letter opposed binding say on pay (BSOP) generally, and proposed two dramatic refinements to the UK governments proposal in the event BSOP moves forward nevertheless; namely (1) the BSOP vote requirement should not be imposed on all UK-quoted companies, but should instead should only apply to those that receive sub-standard shareholder advisory votes in more than one year; and (2) when recruiting new talent, boards should not be constrained by the most-recently approved remuneration policy, as the UK consultation draft suggests. For a copy of the Paul Hastings comment letter, just email Mark.
  • 2012.March.14  UK Details Proposal for Binding Say on Pay.  See BIS "Shareholder voting rights consultation"
  • 2012.Mar.14  "UK's Cable Proposes Annual Binding Vote on Say on Pay" (BloombergBusinessweek), beginning "U.K. Business Secretary Vince Cable backed allowing shareholders a greater say over executive pay, including annual votes on compensation and binding votes on exit payments.”  Thanks to Jeremie Gicquel in Paris: (1) see Financial Times reporting that: “Cable under fire for executive pay proposals” and further reporting that Cable has outlined “proposals to give shareholders in quoted companies an annual binding vote on future executive pay policy” with a 50-75 per cent vote for the policy to be approved, as he wants “shareholders to feel empowered to prevent rewards for mediocrity or failure”; and (2) see CFO World adding that “the consultation, which will end on 27 April, aims to gather evidence on the impact, costs, benefits and likely behavioural effects of the proposals”.