Speaking at the annual American Law Institute-American Bar Association conference on corporate governance, Ira Millstein, a partner at Weil, Gotshal & Manges LLP, explained Thursday to corporate directors and executives that they need to take new steps to learn who their investors are, find out what issues they care about and begin to seriously communicate with shareholders. If they don't listen to his advice, expect unwelcome changes that will force that discussion, Millstein added.
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"If corporations don't begin to open up and discuss compensation, we're going to get a 'say on pay' law in the next administration," Millstein warned.
Millstein, who also is a senior associate dean for Corporate Governance at Yale School of Management, referred to legislation approved by lawmakers in the House of Representatives that would give shareholders the ability to have a nonbinding vote on a CEOs pay package, also known as "say on pay." He said the next administration would likely approve such a measure and possibly other provisions that boards and executives oppose. Earlier at the conference, Securities and Exchange Commission director Kathleen Casey discussed another such provision, "shareholder access," a measure that would give long-term institutional investors additional influence in the corporate director election process. - Ron Orol
Ron Orol is a Washington-based reporter for The Deal and author of Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World.
