Financial regulatory reform has put say-on-pay on the agenda for all U.S. publicly traded companies. The Dodd-Frank bill enacted in July requires public companies to give shareholders a non-binding vote on executive compensation at least once every three years.
But a recent survey suggests companies aren't ready for the new requirement. Just 12% of executives say their companies are well-prepared for such a vote, with another 46% describing themselves as somewhat prepared, according to a survey of executives at 251 U.S. companies by benefits consultancy Towers Watson.
What are companies doing to get ready? Sixty-nine percent say they're identifying possible issues regarding executive compensation, while 60% say they are reworking the compensation discussion and analysis section of their annual proxy filing so that it better explains the reasoning behind the company's executive pay plan. Forty-four percent of companies are meeting with proxy advisers.Towers Watson notes that while many companies agree proxy advisers influence decisions on executive pay, 42% say the design of their executive pay program does not take into account the guidelines established by the proxy advisory firms.