Say on Pay and SEC Rulemaking (Substance not Process)

The SEC has put out a rule proposal designed to implement the say on pay provisions in Dodd-Frank.  See Exchange Act Release No. 63124 (Oct. 18, 2010).

The SEC did not script the resolution that must be submitted to shareholders with respect to say on pay (compare that to the Chancery Court in Airgas where it found a drafting problem with a staggered board bylaw and set out the language that would eliminate the concern).  Thus, the proposed rule "does not require issuers to use any specific language or form of resolution to be voted on by shareholders."  While considerable flexibility exists, what it cannot be is approval of policies and procedures.  Thus, for example, Motorola sought approval of "the company's compensation philosophy, objectives and policies." 

This would presumably not be permitted under Rule 14a-21.