Say-on-pay solidified the role of the proxy statement—particularly the CD&A —as the primary vehicle for the company to explain executive pay to investors. Many issuers, including a majority of the Top 100 Companies, refined their compensation disclosures to better explain the compensation process and effectively serve as a supporting statement for their say-on-pay votes. In particular, there was increased use of "executive summaries" in the CD&A (including at 76 of the Top 100 Companies) that:

Also notable was the increased use of graphics, tables and other visual aids in the CD&A. Another disclosure trend was the use of an upfront "proxy summary" enabling shareholders to glean in one spot all essential information in the proxy statement. These proxy summaries focused on all actions to be taken at the annual meeting and were not limited to executive compensation matters.

2011 disclosures with respect to the relationship of compensation and risk and the independence of compensation consultants reflected the experience from the 2010 proxy season as well as SEC interpretations through comment letters and public speeches. This resulted in more detailed and uniform disclosures in both areas. 96 of the Top 100 Companies provided some compensation related risk disclosure in their proxy statement, many of which:

The Dodd-Frank Act requires that compensation committees have the authority to retain or obtain the advice of compensation consultants, legal advisers and other advisers. Compensation committees must be afforded sole discretion to appoint, compensate and oversee the work of these advisers and companies must provide committees with "appropriate funding" for payment of reasonable compensation to the advisers. All but four of the Top 100 Companies provided disclosure regarding compensation consultants. 63 of the companies that retained consultants noted that the consulting firm provides no other services to the company and 18 stated that they switched to an independent consultant mid-year or will do so in calendar year 2011.

2011 showed the continued growth in the number of Top 100 Companies publicly disclosing that they maintain a compensation recoupment or "clawback policy". 81 companies currently maintain policies (up from 71 in 2010). Three companies also disclosed that they have adopted a clawback policy or expanded their existing clawback policy to be effective in calendar year 2011 or later. The Dodd-Frank Act requires all public companies to implement a clawback policy. SEC regulations are expected to be proposed in the second half of calendar year 2011 and become effective in 2012. Most companies will likely need to revisit their existing policies to comply with the Dodd-Frank Act’s requirements.

The Survey and our companion survey regarding general governance practices are available on the Shearman & Sterling web site at corpgov.shearman.com. This site also includes information about our upcoming corporate governance symposium and contact information for members of our corporate governance advisory group.

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