When preparing their proxy statements for the 2013 proxy season, smaller reporting companies should keep in mind that the temporary exemption from the say-on-pay vote requirements that applied to them during the last two proxy seasons is no longer available going forward. For shareholder meetings occurring on or after January 21, 2013, smaller reporting companies will be required to conduct non-binding say-on-pay and say-on-frequency votes in accordance with Rule 14a-21(a) and (b) under the Securities Exchange Act of 1934.
The non-binding say-on-pay vote is required at least once every three calendar years and covers only named executive officer compensation as disclosed pursuant to Item 402(m) through (q) of Regulation S-K. The Instruction to Rule 14a-21(a) includes a non-exclusive example of a say-on-pay resolution that would satisfy the requirements.
At least once every six years, a non-binding say-on-frequency vote is required as to whether the say-on-pay vote should be held every one, two or three years. The form of proxy must include four boxes, giving shareholders the ability to choose among one, two or three years for the say-on-frequency vote or to abstain. Other alternatives are not permitted.
A company has to disclose in an amendment to the Form 8-K disclosing the voting results of the last shareholder meeting its decision as to how frequently it will hold the say-on-pay votes. The Form 8-K amendment must be filed no later than 150 days after the end of the shareholder meeting at which the say-on-frequency vote occurred, but not later than 60 days before the Rule 14a-8 deadline for submitting shareholder proposals as disclosed in the company's most recent proxy statement.
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