Co‐Organizers: Lucian Bebchuk and Robert Pozen
Co‐Sponsors: Harvard Law School Program on Institutional Investors,
Harvard Law School Program on Corporate Governance, Harvard Business School, and
Harvard Kennedy School Center for Business and Government
Supported by the Investment Company Institute
The Harvard Institutional Investors Roundtable was convened November 8-9, 2011. The event brought together prominent members of the institutional investor world to discuss a number of related issues concerning shareholder voting. During the morning sessions, the roundtable discussed lessons from the first year of advisory votes on executives compensation and on how institutions should vote on compensation arrangements in the future. During the second half of the day, the roundtable discussion focused on majority voting and withhold votes, as well as on the reporting of proxy votes to beneficiaries. The event started with a keynote talk by and discussion with Larry Summers.
November 8, 2011
Harvard Faculty Club
November 9, 2011
Harvard Business School
|8:30-9:00 am||Registration and continental breakfast|
|9:00-9:30 am||Keynote talk by Larry Summers|
|9:45-11:00 am||Session 1: Roundtable discussion on advisory votes on executive compensation – What happened in the 2011 proxy season under Dodd Frank
Subjects open for discussion in this session included (i) what decision-making process their institutions used to make say on pay voting choices during 2011, (ii) how to interpret the overwhelming support received for say on pay proposals in a vast majority of companies, (iii) how say on pay voting affected issuers’ decisions, the interaction between issuers and their shareholders, and other aspects of governance, and (iv) whether institutions, proxy advisors, and companies will/should approach say on pay votes differently in the future than during 2011.
|11:00-11:20 am||Break (w/ coffee)|
|11:20 – 12:35 pm||Session 2: Roundtable discussion on advisory votes on executive compensation ‐ What should be the criteria for such advisory votes going in the future
Subjects open for discussion in this session included (i) what weight should be given, and what criteria should be used, in investors’ evaluation of whether pay is adequately tied to performance, (ii) what weight should be given, and what criteria should be used, in investors’ evaluation of whether pay levels are adequately set, (iii) participants’ views on specific aspects of pay arrangements and design such as short-term incentive compensation, long-term incentive compensation, change-of-control arrangements, CEO pay relative to other named executives, claw-back and equity holding requirements, and benchmarking and peer comparisons, and (iv) what advisers, companies, and others may do to improve investors’ evaluation of pay arrangements.
|12:35-1:45 pm||Buffet lunch|
|1:45-3:00 pm||Session 3: Roundtable discussion on majority voting and withhold votes
Subjects open for discussion in this session included (i) the incidence of majority voting (which is much lower for companies outside the S&P 500 than inside it) and what institutional investors are/should be doing about it if anything, (ii) variants of majority voting (e.g., bylaws vs. policies, the presence or absence of discretion of the board to accept resignations), (iii) the tendency of boards not to accept resignations tendered by candidates receiving less than a majority of the votes cast, (iv) how institutions are/should be making decisions whether to withhold support from directors, and (v) the interaction of majority voting and other aspects of current corporate governance.
|3:00-3:20 pm||Break (w/ coffee)|
|3:20-4:35 pm||Session 4: Roundtable discussion on the new requirements for reporting certain proxy votes to beneficiaries
Subjects open for discussion in this session included (i) whether or not the reporting requirements for mutual funds are beneficial for fund shareholders, (ii) whether other types of institutional investors should be required, or voluntarily elect, to disclose all of their proxy votes, (iii) how the disclosure of all proxy votes by mutual funds affect their voting decisions (if at all), and (iv) how the disclosure of all proxy votes by mutual funds is utilized by parties other than fund shareholders.
|4:40 pm||Shuttle to Logan airport|