I have received confirmation that at least some institutional holders have now received Schering-Plough's "Executive Compensation Survey" (that's the SEC-filed document). Note the last part of the answer to Question 3, below. As I suggested, right here, last Friday and Saturday, Schering-Plough will now report on the survey before the merger closes. Cool. Be sure to send in copies of all those CEO Hassan graphics I've made -- with your replies, folks (especially to Survey Item 5, at the bottom, below). To the Q&A, and Survey, then:
. . . .Questions & Answers on Compensation Survey
Q1. Why is this Compensation Survey Provided?
A1. The Schering-Plough Board from time to time has conducted shareholder surveys to obtain feedback on issues of interest. Surveys are just one of the many methods used to learn about shareholders’ perspectives in the active shareholder relations program led by Schering-Plough’s Governance and Investor Relations teams.
For example, an earlier survey on majority voting for Directors was used to help the Board in decision making on Schering-Plough’s majority vote by-law provision.
In October 2008, the Board announced this survey. Including the survey with the annual report and proxy materials allowed Schering-Plough to reach all holders, while avoiding the cost of a separate distribution.
Q2. Wouldn’t it be easier to conduct a Vote, instead of a survey?
A2. Yes. But our Board does not believe a vote provides enough information to be useful. Compensation is a broad topic, and there are many major aspects to consider when evaluating a compensation program, including the mix of cash and equity; the mix of fixed compensation and performance-based compensation; the performance metrics and goals; how to handle early termination for various reasons; benchmarking and peer groups.
If a shareholder votes to ratify executive pay, it does not mean he/she likes every aspect of the current compensation system. Likewise, if a shareholder votes not to ratify executive pay, the Company must then talk to the shareholder to learn what aspects of the compensation system led to the negative vote. So Schering-Plough believes the survey is a more efficient way to obtain useful shareholder input on compensation.
Also, a number of Schering-Plough’s large institutional holders told us they do not favor a “say-on-pay” vote. They use dialogue when they have a specific issue about compensation with a particular company. They told us that their resources would be taxed evaluating pay generally at many companies where they have no particular concern, rather than working in a concentrated fashion at only those companies where they have identified an issue. Because voting carries fiduciary duties that a survey does not, shareholders who have no concerns over compensation at our company will be more comfortable skipping the survey than they would be skipping a vote.
Q3. With the proposed combination of Schering-Plough with Merck, how will the survey be reported?
A3. At the time the survey was announced in October 2008, the Board had planned to discuss the survey results in the 2010 proxy statement. We are evaluating a process to complete and discuss the survey before the proposed transaction with Merck closes. The timing for closing depends on antitrust approvals and other contingencies. . . .
[From the Survey:]
. . . .5. Please write any other comment about executive or director pay that you may wish the Board to consider:
__________________________________________________ . . . .
Light 'em up, folks!