In yesterday’s post, I make the point that the Dodd-Frank Act requires issuers to include a resolution in their proxy statement regarding the frequency of say-on-pay advisory votes. Because the vote on this resolution is advisory only, some issuers appear to be taking the position that they don’t have to apply the “normal” rules to determine whether the resolution is adopted. Moreover, it is very tempting to invoke a plurality voting rule (i.e., the choice that receives the most vote wins) because the shareholders must be allowed to instruct their proxies to vote on 1, 2, or 3 years or abstain.

However, the fact that a resolution is nonbinding does not make the question of whether it passes irrelevant. Just ask any proponent of a nonbinding shareholder resolution if they care whether the resolution passes. Furthermore, the Securities and Exchange Commission’s proxy rules require issuers to disclose the vote required for approval of matters presented.