Some issuers will learn in the upcoming proxy season that ISS is recommending a “No Vote” on their say-on-pay proposal.  An outline of a contingency plan is set forth below. 

STEP 1:  Understand the reason for the ISS recommendation and pinpoint any flaws or errors in their logic.

STEP 2:  Issuers, after consultation with legal counsel, should emphasize their position by filing addional solicitation materials like Tyco International.

STEP 3:  Contact your large shareholders personally and explain your position.  Consult with your legal counsel about what is permissible under the proxy rules.

STEP 4:  Prepare for the meeting.  The vote is likely to be close, so review your proxy materials to see what disclosures were made about when a vote passes.  Understand the treatment of abstentions and broker non-votes.

STEP 5:  Prepare for post-meeting public relations.  Perhaps consider drafting two press releases, one addressing a vote where a majority supports the executive compensation program and one where there is no majority support.

STEP 6:  It is still likely that even if a majority of shares voted support the executive compensation program, there will still be a significant “No Vote.”  After the meeting consider means to address and implement any perceived shortcomings and disclose those steps in the next CD&A.

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