The SEC announced today a rule requiring corporations publicly traded in the US to hold non-binding “Say on Pay” votes at least once every three years. As is already the case in the UK, where Say on Pay has been mandatory since 2004, this move provides investors with an opportunity to formally voice concerns over problematic executive pay packages. After 6 years, engagement between boards and shareholders in the UK has increased in frequency and sophistication and has ultimately improved disclosure around executive pay (see “Say on Pay, 6 Years on: Lessons From the UK Experience”). It remains unclear, however, if Say on Pay will have a long-term impact on pay/performance alignment. This is also true in Canada, where an increasing number of publicly traded corporations are voluntarily adopting Say on Pay.
CCBE will be monitoring the impact of US Say on Pay closely in coming years.