Expert Perspective from Grahall’s OmniMedia Editorial Board
 
As Eleanor Bloxham writes in her May 25, 2010 article published in CNN Money.com (Say on Pay: 4 ways to defend executive pay under the new law): “The new finance reform bill is set to become law and say on pay, an advisory vote on compensation for shareholders, is a centerpiece of the reform. Few boards and companies, or investors, are ready for what that means…  with “say on pay”, the stakes have been raised for boards to explain in clear, credible English why the pay packages they propose should be adopted.”

Bloxham endorses say on pay:  “Companies… have offered “kitchen sink” defenses, as to why their pay plans are too different, too specialized, too standardized or too complicated for shareholders to properly understand and evaluate. But Congress has totally upended the board-shareholder power structure: companies are going to have to defend their own words and statements to shareholders this year, at the risk of eating them. So, let the votes begin.”

Grahall has written many blogs on say on pay.  Last December we wrote in our blog It’s Not an Easy Fix that “It is possible that ‘say on pay’ votes, even though non-binding,  could become the equivalent of a ‘bleeding edge’ endorsement or indictment of Board governance and fiduciary duty, effectively becoming  binding in their application and ability to control executive pay.   Boards with ‘yes’ votes get a ‘rubber stamp’ on their decision and Boards with ‘no’ votes could possibly risk civil suits if they take no action.  In the end, making ‘say on pay’ a defacto binding  vote, transfers these decisions from an informed group (i.e., the Board) who (we would hope) has made decisions based on solid data, business strategy and sound philosophy to an uniformed group (i.e., shareholders) who made decisions based on imperfect data or a gut reaction.”

Essentially if one believes in the merits of our corporate governance system, then say on pay should not be needed, since the board should be able to do a better, more informed job than the populace. 
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