Our firm has recently released a new M&A Commentary on proposals requiring an annual shareholder vote on executive compensation, known as “Say on Pay” proposals, that many public companies are likely to face during the 2008 proxy season. The Commentary, entitled “Say on Pay” Shareholder Advisory Votes on Executive Compensation: The New Frontier of Corporate Governance Activism, provides management and boards with a strategic overview of the issues these popular shareholder proposals are likely to raise–and describes the implications that will follow if the proposals pass. Among other things, the Commentary notes that:

The advent of “Say on Pay” for a company means, as a practical matter, that its executive pay policies and procedures will have to meet ISS guidelines on executive compensation or suffer a very strong risk of ISS recommending that shareholders vote “No on Pay.” Such a negative vote, if not addressed promptly by modifying executive compensation to fit ISS guidelines, will almost certainly lead to an ISS withhold vote recommendation against the compensation committee and perhaps the entire board.

The full Commentary is available online here.