28 Jan. 2011 | Comments (0)
So, how did the two proxy items fare during the Jan. 25 annual meeting? Broc Romanek, in his post on TheCorporateCounsel.net, reports the Say on Pay plan passed with two-thirds of the vote and shareholders opted for an annual Say on Pay vote instead of the company’s triennial vote proposal. The vote on the Say When on Pay item was 62 percent for annual, 36 percent for triennial, 1 percent for biennial. For the full post, read here. Next week, I plan on writing a Worth Reading post on the Say on Pay and Say When on Pay.
Proxy Item No. 3: Advisory (Non-binding) Vote Approving Executive Compensation“We are asking our shareowners to provide advisory approval of the compensation of our proxy officers, as we have described it in the “Executive Compensation” section of this proxy statement, beginning on page 30. While this vote is advisory, and not binding on our company, it will provide information to our people and compensation committee regarding investor sentiment about our executive compensation philosophy, policies and practices, which the Committee will be able to consider when determining executive compensation for the remainder of fiscal 2011 and beyond. Following is a summary of some of the key points of our 2010 executive compensation program. See the“Executive Compensation” section above for more information. Our executive compensation program has been designed to implement certain core compensation principles, including alignment of management’s interests with our shareowners’ interests to support long-term value creation and pay for performance. In the course of establishing the fiscal 2010 compensation program and awarding compensation, our people and compensation committee determined the use of performance-based incentives to motivate our proxy officers to achieve short-term and long-term business goals, after reviewing data and analyses regarding the median market compensation and the company’s business expectations for fiscal 2010. The people and compensation committee received advice and counsel on the program from its independent executive compensation consultant, which provided no other services to our company other than those provided directly to or on behalf of the committee. In support of the core principles, our fiscal 2010 executive compensation program was adjusted to reflect our expectations for a difficult business year. While we have generally targeted each component of executive compensation to the median range of similar-type compensation for our comparator group, actual compensation may be higher or lower based on operating and stock price performance. In consideration of performance expectations for fiscal 2010, our people and compensation committee:
- froze calendar year 2010 base pay for our CEO and all but one of our other proxy officers;
- reduced by 25% award opportunities in the regular annual and long-term (stock options and Financial Goal RSUs) incentive program for each of our proxy officers and other officers; and
- set performance targets based on the lower operating performance expectations for fiscal 2010, for our annual and long-term incentive plans.”
Proxy Item No. 4: Advisory (Non-binding) Vote Determining the Frequency of Advisory Votes on Executive Compensation“In addition to the advisory approval of our executive compensation program, we are also seeking a non-binding determination from our shareowners as to the frequency with which shareowners would have an opportunity to provide an advisory approval of our executive compensation program. We are providing shareowners the option of selecting a frequency of one, two or three years, or abstaining. For the reasons described below, we recommend that our shareowners select a frequency of three years, or a triennial vote. Our executive compensation program is designed to support long-term value creation, and a triennial vote will allow shareowners to better judge our executive compensation program in relation to our long-term performance. As described in the Compensation Discussion and Analysis section above, one of the core principles of our executive compensation program is to ensure management’s interests are aligned with our shareowners’ interests to support long-term value creation. Accordingly, we grant awards with multi-year performance and service periods to encourage our proxy officers to focus on long-term performance, and recommend a triennial vote which would allow our executive compensation programs to be evaluated over a similar time-frame and in relation to our long-term performance. A triennial vote will provide us with the time to thoughtfully respond to shareowners’ sentiments and implement any necessary changes. We carefully review changes to our program to maintain the consistency and credibility of the program which is important in motivating and retaining our employees. We therefore believe that a triennial vote is an appropriate frequency to provide our people and compensation committee sufficient time to thoughtfully consider shareowners’ input and to implement any appropriate changes to our executive compensation program, in light of the timing that would be required to implement any decisions related to such changes.”