Schering-Plough tries ‘say on pay’ survey

Oct 29, 2008

Move stops short of a formal proxy vote

As the financial crisis fixes fresh focus on executive compensation, Schering-Plough has announced a plan to mail a ‘say on pay’ questionnaire to shareholders. The survey, which will go out with the company’s 2009 proxy statement ahead of a late May annual meeting, stops short of the advisory vote on compensation offered by a few US companies including Aflac and Verizon, but may benefit investor relations.

‘This survey is evidence of our commitment to seek and consider shareholder input, as we did in 2006 with the shareholder survey on majority voting for directors,’ says Pat Russo, chair of Schering-Plough’s nominating and corporate governance committee, in a notice detailing the plan.

Shareholders’ views on executive and director pay will inform future work of the compensation committee and the board, and will be discussed in the compensation, discussion and analysis (CD&A) section of the 2010 proxy statement, the company says. Rich Koppes, a former general counsel at CalPERS who is co-directing the executive education program at Stanford Law School, will oversee the process and report survey results.

Paul Hodgson, senior research associate with the Corporate Library, calls the move a good first step to gauge interest. ‘This is a very interesting move, particularly the offer to include shareholder comments in the CD&A,’ he says. ‘It is true also that it is a good follow-on from Schering-Plough seeking input on majority voting in 2006.’

In a comment posted to an internet shareholder and governance forum moderated by investment banker Gary Lutin, Timothy Smith, senior vice president of Walden Asset Management, says the move was ‘another act of corporate governance leadership’ by Schering-Plough. Still, he feels it is time for all shareholders at Schering-Plough and beyond to have an official vote on pay like they do on directors and auditors.

Schering-Plough posted an announcement about the survey in the corporate governance section of its company website. In an email message, Susan Wolf, the company’s corporate secretary, vice president of corporate governance and associate general counsel, says the news was also sent to shareholders who have registered interest in the pay issue. She adds that the decision to solicit views is an initiative of the CEO and other board members, and is not the product of negotiations with a shareholder.

By Anna Snider