Among the many elements of the massive Dodd-Frank Wall Street Reform and Consumer Protection Act are provisions applicable to public companies requiring defined “say-on-pay” votes. These are shareholder votes on

*executive compensation generally, and

*executive compensation relating to business combinations, known as “golden parachutes”.

In the United States, say-on-pay is advisory and not binding on a company’s board of directors. However, thus far in 2010, at least three companies have received negative say-on-pay votes from shareholders. Public companies would be wise to review their compensation programs with a view to how those programs will be perceived, particularly as explained in the Compensation Discussion and Analysis section of their proxy statements. We doubt that compensation committees will be happy to receive even a non-binding “no” vote on their compensation strategies and implementation. A “no” vote could also result in shareholder advocacy organizations deciding to recommend “withhold” votes for compensation committee directors who are running for election to the board.

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