Judy assumed responsibility for the NYSE’s Corporate Actions & Market Watch team in September 2008. She has been actively involved in...
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Everyone knee deep with proxy season getting into full swing? As companies worry about the new executive compensation disclosures they must include in their proxies this year - say on pay, frequency of pay (annual, biennial or triennial), expanded CD&A and whether proxy access will ever go forward – two other important items come to mind: whether or not your Board made a recommendation on the frequency of pay vote and if your proxy service provider incorporated all 4 choices for the frequency of pay vote on your proxy card (every 1, 2, 3 years and an option to abstain).
The SEC's new rule on executive compensation was published on January 25th. Management/Boards who elect not to make a recommendation on the frequency of pay proposal may want to take note. Typically, if an investor sends a proxy card back signed, but without specific instructions for each proposal, these were deemed returned votes in favor of Management/Board. Per the SEC’s new rule, for frequency of pay in particular, issuers will only be able to count votes that come back with proxy cards that are signed, but without instructions if the issuer has included a recommendation on the frequency of pay vote in its proxy, allows investors to abstain from voting on this proposal per the investor’s proxy card, and includes language about how uninstructed shares will be voted in bold on the proxy card.
So, beware and be sure to evaluate the impact of not being able to count these votes if your Management/Board has chosen not to offer a recommendation on the frequency of pay proposal. Also, if you want to be able to count these votes as for Management/Board, check that your proxy card includes the 4 choices required by the SEC prior to sending it out!
Another twist to consider as you ready yourself during proxy season. Here’s a link to the SEC filing.