Say-on-Pay

Executive compensation is always a highly scrutinized topic for public companies. Investors want to understand the justification for proposed compensation, as well as the expectations that each executive’s performance is being evaluated.

As your Say-on-Pay advisor, we assess whether your executive compensation plan is likely to be favorably received or if potential headwinds are looming. Advance knowledge of opposition permits companies to take proactive measures to secure the best possible vote outcome.

The SEC weighs in on the rules that guide Say-on-Pay including:

  1. A Say-on-Pay vote on whether to approve the company’s compensation for its named executive officers as disclosed, under the SEC’s executive compensation disclosure standards (Item 402 of Regulation S-K). The vote must be held at least once every three years.
  2. A say-on-frequency vote on whether to hold the Say-on-Pay vote every one, two, or three years. The say-on-frequency vote must be held at least once every six years.
  3. A “golden parachute” vote in connection with a merger, acquisition, or similar extraordinary business transactions. A company that solicits a proxy concerning such a transaction must disclose any “golden parachute” arrangements between it and its named executive officers, or between it and the named executive officers of the acquiring company, if the company soliciting the merger proxy is not the acquiring company. Unless those golden parachute arrangements had already been subject to a Say-on-Pay vote, the company must give shareholders a non-binding vote on whether to approve the golden parachute arrangements with a company’s named executive officers.

Investors will be reviewing several factors when evaluating your executive compensation, including but not limited to:

  • Alignment between pay and performance
  • Pay magnitude
  • Use of performance-based awards
  • Moonshot awards
  • Problematic pay practices

Maximize the changes investors and the proxy advisory firms will support your executive compensation program by partnering with Alliance Advisors’ as your Say-on-Pay partner.

Contact us if you are interested in finding out more.

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