The Dodd-Frank Wall Street Reform and Consumer Protection Act: A Review of the 2011 Proxy Season and a Look Forward to 2012

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As the 2011 proxy season draws to a close, it is time to reflect on the lessons learned from this past year– the first year in which the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) affected the proxy season. Dodd-Frank mandated that almost all public companies1 include two additional proposals in their 2011 proxy materials. The first required companies to conduct a separate stockholder advisory vote to approve the compensation of executives (“say-on-pay”). The second required companies to conduct a separate stockholder advisory vote to determine how frequently a company will conduct say-on-pay votes in the future (“say-on-frequency”).

The following is a brief summary of the most important takeaways from the 2011 proxy season, as they relate to say-on-pay and say-on-frequency.

* Public company stockholders overwhelmingly approved present executive compensation practices. Of over 2,000 public companies that have thus far filed results with the SEC, only 37 companies failed to obtain at least majority support for their executive compensation programs, representing less than 2% of all such companies. What’s more, a great majority of companies had tremendous support for their executive compensation programs. 71% of public companies received more than 90% stockholder approval, and the average approval rating among all public companies was 91%.

* Although stockholders generally signaled their satisfaction with most companies’ executive compensation programs, stockholders also showed a clear preference for engaging in a say-onpay vote each year. Annual voting on say-on-pay was the top choice by stockholders for 81% of public companies. Stockholders preferred annual say-on-pay votes even in the face of management recommendations of triennial votes.

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