As we approach the end of the year, it is time to start thinking about the hot button issues that will face boards and senior management – and that may show up in proxy statements – in 2012. Here are my top ten broken out by four categories:

A. Executive Compensation/Say on Pay

1. Responding to your SOP vote – Compensation committees should prepare with a similar level of intensity as last year. Many institutional investors, like ISS, usually revise their voting guidelines annually and could make changes that negatively impact on how they view your compensation program;

2. Problematic Pay Practices – Boards should seriously consider last year’s SOP votes as a wake-up call for compensation committees that have failed to remove or end practices that both proxy advisory firms and large shareholders have deemed problematic;

3. Say-On-Pay Engagement – Compensation committees should be asking, especially those at firms that either lost or sustained their SOP vote by narrow margins, how best to reach out and engage their shareholders on these issues. The compensation committee and senior management should be prepared to consult with advisors before reaching out.

(more…)