Time for Say on Pay

It's "say on pay" time, or at least that's just around the corner. Companies are struggling to decide (or maybe they are not struggling) how frequently to hold say on pay votes. According to a December 2010 Towers Watson survey, of 135 publicly traded respondents, 51% plan to hold annual say on pay votes, 10% biennial votes and 39% will hold their votes only as frequently as required -- once every three years.

What does it say about those various companies? In my opinion, in today's climate, a company that is not willing to hold an annual say on pay vote is just spitting in the collective faces of its shareholders. Of the companies who have decided how they will evaluate their shareholder votes, most, according to the survey, say that an 80% shareholder approval rate will be considered successful.

If we consider the typical shareholder profile of a typical publicly traded company, I suspect that significant numbers of shares are held by institutional investors. Of the shares held by regular old people like you and me, far more are higher-income individuals than not and will not be immediately scared off by currently reasonable levels of executive pay. If you can't get 80% approval annually, you are doing something wrong ... and you should change.