Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

Through February 4, 2011, 30 issuers have reported voting results for non-TARP say-on-pay matters.  Of these, 20 boards recommended a triennial frequency and three recommended a biennial frequency.

Frequency Vote

Biennial

Of the three boards recommending a biennial frequency, only one issuer, Hormel, received shareholder support.  As a Minnesota-based law firm we have the greatest respect for Hormel, but this vote is of little predictive value as approximately 51% of the shares are owned by Hormel Foundation or insiders.  Of the remaining two issuers, perhaps Rochester Medical had a decent chance of having a biennial frequency approved with only 40% institutional ownership and 19% being controlled by insiders or others.  However, broker non-votes of 46% prevented that from occurring.

Triennial

To date six issuers with a market of over $10 billion had boards that recommended a triennial frequency.  None have succeeded in obtaining shareholder support.

To date four issuers with a market cap of over $1 billion to $10 billion had boards that recommended a triennial frequency.  Only one, Sally Beauty, with 51% institutional ownership and 5% broker non-votes, has succeeded in obtaining shareholder support.

To date two issuers with a market cap of over $200 million to $1 billion had boards that recommended a triennial frequency.  Only one, Laclede, with institutional ownership of 45%  and broker non-votes of 19% succeeded in obtaining shareholder support.

To date eight issuers with a market cap of $200 million or less had boards that recommended a triennial frequency.  Each issuer has received shareholder support for a triennial frequency.  It is still difficult to predict success in this area because either many issuers have significant insider or other controlling parties of more than 15% or market caps of less than $20 million.

No Votes on Say-on-Pay

A total of 13 issuers with a market cap of over $1 billion have reported say-on-pay results.  Of these, only seven issuers, or 54%, received votes against executive compensation of approximately 5% or less.  Here we eliminated Hormel because of a controlling shareholder.  No votes are calculated by dividing the votes against executive compensation by the total of votes for and against executive compensation and abstentions.

Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.