The Latest Results and Trends after Second Month of Say-on-Pay Voting


It has now been two months since shareholders were able to render advisory votes on the executive compensation provided at their publicly-held companies in accordance with rules adopted by the Securities and Exchange Commission ("SEC") in January 2011 ("Say-On-Pay"). These rules were promulgated under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Reform Act"). Our Say-On-Pay Site provides periodic blogs on Say-on-Pay developments, along with an overview of the applicable rules and requirements, and there are also Say-On-Pay voting results and statistics which we have been updating and posting on a daily basis.

Of the 185 Say-On-Pay votes which have been reported through March 20, 2011, the shareholders at two companies, Jacobs Engineering Group Inc. and Beazer Homes USA, Inc., have voted against approving the executive compensation of their named executive officers. A third company, IsoRay, Inc., reported that its "stockholders did not approve, on an advisory basis, the compensation of IsoRay’s named executive officers" even though it also reported that there were more "For" votes than "Against" votes on its Say-On-Pay proposal. We note that Beazer also announced earlier this month that its Chief Executive Officer had reached a settlement with the SEC whereby he would repay back to Beazer approximately $6.5 million of previously received compensation, along with company shares and stock units. As reported by the SEC, the disgorged amounts represented the CEO's entire fiscal year 2006 incentive bonus. Beazer had previously restated its 2006 financial statements and the forfeiture was required under the clawback provisions of the Sarbanes-Oxley Act which mandates that a CEO repay incentive compensation that was received as a result of the company's erroneous financial statements.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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