Executive Compensation

 
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A Guide to Executive Compensation in the Dodd-Frank Act


Disclosure of Shareholder Exec Comp Votes


DFA now requires many asset managers to disclose how it votes on the three exec comp matters subject to a vote: say-on-pay, say-on-frequency, and say-on-parachutes.


Who files: The requirement pertains to asset managers that file Form 13-F, which is of course the quarterly disclosure of a fund’s individual holdings. Form 13-F filers in general have assets of at least $100 million.


Similar to mutual fund vote disclosure: This requirement works in essentially the same way as one that applies to institutional fund managers, mostly mutual funds. Since 2006 mutual fund managers have disclosed how they vote at all annual and special meetings, including on director elections, shareholder resolutions, appointment of auditors, and approval of equity issuance for incentive compensation plans.


Disclosure filing format: Fund managers will disclose votes on Form N-PX. Mutual funds already disclose all votes on Form N-PX, so they know this form well. The SEC has proposed some minor revisions to Form N-PX to reflect the new exec comp votes. So, mutual fund managers will continue to report all votes on Form N-PX, on all corporate matters. Asset managers that are not mutual funds, but which file Form 13-F, will report exec comp votes, again on Form N-PX.


Timetable: In general, asset managers file Form N-PX annually:


  1. ❖Form N-PX pertains to votes for the one-year period July 1-June 30.

  2. ❖Asset managers file Form N-PX by August 31 following that one-year period.

  3. ❖Seeing as shareholders will vote on exec comp starting at meetings that occur on or after January 21, 2011, the vote disclosure obligations begin then.

  4. ❖Asset managers will file Form N-PX for the January 21 – June 30, 2011 period, with that filing due by August 31, 2011.

  5. ❖For subsequent periods, asset managers will file Form N-PX for the July 1-June 30 period by August 31, so for July 1, 2011 - June 30, 2012, they will file Form N-PX by August 31, 2012.