The Sexennial Vote On Frequency of Say-on-Pay: Know When to Say When, or Risk Compromising S-3 Eligibility

By: Edward G. Olifer

We are in the bloom of annual meeting season for calendar year filers. Reporting companies are dutifully reporting annual meeting results under Item 5.07 of Form 8-K within four business days of their annual meetings. However, this year is a little different.

For the first time in six years, many SEC reporting companies are again required to place before shareholders a non-binding resolution on the frequency of their “say-on-pay” vote. The advisory vote seeks shareholder input as to when future say-on-pay proposals will be voted on by shareholders: every year, every two years or every three years. The reporting requirements for this one-every-six year proposal are different than those for other proposals. Companies heading home following their annual meetings should be careful to timely touch all of the proposal’s disclosure bases to avoid compromising their S-3 eligibility, as numerous companies did in the proposal’s inaugural reporting season six years ago.

Under Form 8-K Item 5.07(b), for votes on the frequency of say-on-pay proposals, companies must disclose the number of votes cast for each of the proposal’s options, as well as the number of abstentions.  In addition to the vote tally, Item 5.07(d) requires a company to report its decision, in light of the shareholders’ vote, as to how frequently the company will actually include a say-on-pay proposal in its future proxy materials. The decision must be reported either in the Form 8-K reporting the annual meeting results or in a later filed amendment to that Form 8-K. Alternatively, companies may report annual meeting results in a Form 10-Q or 10-K that is filed on or before the due date that an Item 5.07 Form 8-K would otherwise be due. If the 10-Q/10-K disclosure does not report the company’s decision as to how frequently it will include future say-on-pay proposals in its proxy materials, the company may file a new Item 5.07 Form 8-K, rather than an amended Form 10-Q or 10-K, to report that decision. See Form 8-K General instruction B.3 and question 121A.04 of the SEC’s Form 8-K Compliance and Disclosure Interpretations.

In any case, Item 5.07(d) requires that companies must report their decision on the frequency of say-on-pay proposals by no later than 150 days after the shareholder meeting at which shareholders voted on the frequency of say-on-pay, but in no event later than 60 days prior to the deadline for submitting shareholder proposals as disclosed in the company’s most recent proxy statement for shareholder meeting at which shareholders voted on say-on-pay frequency. The enhanced reporting obligation was overlooked by numerous reporting companies in 2011. As Item 5.07 is not one of the enumerated items for which General Instruction I.A.3(b) of Form S-3 provides relief, the oversight caused some severe cases of S-3 eligibility anxiety. Transgressors seeking to make use of registration statements on Form S-3 scrambled to amend their original Item 5.07 Forms 8-K to report their boards’ decisions on say-on-pay frequency and to seek Form S-3 eligibility waivers (d/b/a “non-objections”) from the Office of Chief Counsel.

Companies seeking to avail themselves of the waiver process may contact the Chief Counsel’s Office at 202.551.3500.  Waiver requests must be submitted in writing using the following portal: The contents of waiver requests are specific to each situation and the Office will counsel filers as to what should be included, but filers should expect to provide the Staff with the following information:

  • Description of the company and its reporting status (“large accelerated filer”, etc.);
  • Description of the untimely report;
  • Basis for the non-objection request;
  • Reason(s) why the non-objection request should be granted;
  • Confirmation that the company has timely satisfied all other Exchange Act filing requirements and otherwise meets the Form S-3 eligibility requirements;
  • Company’s prior filing history and whether it has previously filed late reports;
  • Controls and procedures adopted to ensure future reporting compliance; and
  • Explanation of timing of requested non-objection.

Staff determinations on these requests are delivered to the company telephonically, not in writing. Neither the request nor the determination is posted on EDGAR.

The bottom line is to stay focused on reporting the board’s decision on when shareholders should expect to see say-on-pay proposals in future proxy statements.  After that, see you in another six years.

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