02/14/2012
New SEC CDI Regarding Say on Pay
By Cydney Posner
The SEC has posted one new CDI regarding the correct description of the say-on-pay vote for proxy cards and voting instruction forms. The following are examples of advisory vote descriptions that the SEC views to be consistent with requirements of Rule 14a-21:
To approve the company's executive compensation
- Advisory approval of the company's executive compensation
- Advisory resolution to approve executive compensation
- Advisory vote to approve named executive officer compensation
The following example is not consistent with Rule 14a-21, in the SEC's view:
- To hold an advisory vote on executive compensation
What's wrong with it? It is not clear what shareholders are being asked to vote on, that is, shareholders could interpret it to ask for a vote on whether to hold a vote, not whether to actually approve, on an advisory basis, executive compensation.