Attorneys Mike Melbinger and Erik Lundgren of Winston & Strawn offered a recap of the 2011 proxy season in a webinar this week. Melbinger produces the most-read blog on compensation issues. While only 35 companies received failed say on pay (SOP) advisory votes to date, Melbinger insisted that this proxy season was no walk in the park. Not only do shareholders have heightened disclosure expectations, but seven more provisions of Dodd Frank will be in effect next year and he predicts that ISS and shareholder groups will be more dogged in their pursuits going forward. He also noted that companies made extra efforts to achieve positive votes in 2011—more companies provided executive summaries in the CD&A and linked pay for performance. Many emphasized “get out the shareholder vote” including shareholder and ISS outreach.
Tell your story was the theme of the action items that Melbinger suggested. “Silence is not golden. Unless you affirmatively, unequivocally adopt best practices, unambiguously disclose them and beat ISS over the head with them, you run the risk that ISS and others will assume that you do not follow that best practice.”
Now is the time for boards to review what they learned from shareholders – whether at the annual meeting or proxy voting or shareholder outreach. As for compensation, and get rid of the problems and follow best practices now.