Say-On-Pay Votes: How To Secure Shareholder Support

Interested in improving your company’s chances of securing shareholder say-on-pay support? Model your investor communications programs after your customer relations practices. That’s according to Gary Lutin, chair of the Shareholder Forum, an independent moderator of investor/executive exchanges.

‘A company that’s publicly traded likely has won customers’ business by delivering a cohesive marketing message,’ Lutin explains. ‘You need to do the same thing with investors, coordinating the messages of the people charged with responding to investors’ questions about both voting and valuation issues.’

Integrating the communications of executives who focus on governance and the ones who devote their time to buy-sell issues might seem like a no-brainer. But people familiar with shareholder relations dynamics report that, within both companies and investor organisations, voting and valuation concerns are often treated as wholly separate from one another.

‘That’s not usually a good thing, but it’s a fact of life,’ says Stephen Davis, a senior fellow at Yale University School of Management’s Millstein centre for Corporate Governance and Performance.

It doesn’t have to be. At Intel, for example, the four departments that engage stockholders consistently – the investor relations group, the corporate secretary, the legal department and the social responsibility group – stay in constant communication with each other, according to Cary Klafter, Intel’s corporate secretary.

Klafter says that, while Intel’s investor relations team almost always visits investors ‘with regard to finance-related topics’, the in-house legal department nevertheless ‘wouldn’t think of doing something involving executive compensation without involving it.’

‘The investor relations team needs to be prepared and understand what our positions are,’ Klafter explains. ‘It’s possible corporate governance issues will arise in the course of its meetings.’

The in-house legal department and social responsibility team are likewise involved in Intel’s quarterly earnings review, though most of the questions fielded on the analysts’ call concern revenue, gross margin and product development.

At each of its last two annual shareholder meetings, Intel conducted say-on-pay votes voluntarily. More than 90 per cent of the company’s shareholders approved the company’s executive compensation plan each time.

Intel’s 2011 shareholder meeting is scheduled for May.

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