Despite ongoing efforts to require a shareholder vote on executive pay at all public companies, few companies have taken steps to prepare for Say on Pay or plan to do so in the next six months, according to a survey of compensation committee members, human resources professionals, and compensation group members.

The House of Representatives approved the Corporate and Financial Institution Compensation Fairness Act, which would require an annual, non-binding adviser shareholder vote on pay, in July. The Senate is also expected to approve the legislation.

Despite that, only 7 percent of 231 participants surveyed by compensation consultancy Pearl Meyer & Partners said their company is "very concerned" about such a vote. Another 35 percent indicated they were only "somewhat" concerned. Meanwhile, two-thirds said their company hasn't taken any steps to prepare for a say-on-pay vote and only 35 percent plan to do so in the next six months.

"Public companies are surprisingly reticent to address the very real likelihood of mandatory say-on-pay votes," said Mike Enos, PM&P managing director. "Although many believe such a requirement will not take effect the until 2011 proxy season, decisions being made now regarding 2010 compensation practices could potentially be the subject of say-on-pay votes in 2011."

While three-quarters of respondents predicted shareholders would approve a SOP vote if it was held, Enos says his firm's experience with TARP clients suggests that proxy adviser groups have and will continue to recommend ‘no' votes for some companies. "The first shareholder vote against pay is more likely a question of ‘when,' not ‘if,'" he said.

Among those companies that have begun preparing for a say-on-pay vote, efforts include:

•Reviewing their proxy Compensation Disclosure & Analysis (CD&A) and related tables to ensure executive compensation disclosure is clear, complete, and not subject to misinterpretation (82 percent);•Keeping abreast of the results of SOP proposals at other companies (81 percent);•Reviewing market benchmarking practices, particularly with respect to selection of appropriate peer groups (69 percent);•Conducting analyses to ensure there is a strong link between executive pay and performance (62 percent) and•Identifying perceived poor pay practices (57 percent)

Only 35 percent of respondents who indicated they were actively preparing for say-on-pay have inquired into their institutional shareholders' general views on say-on-pay or whether those investors are likely to follow the recommendations of proxy advisory firms. About a third (30 percent) said they were unfamiliar with the overall voting guidelines of proxy advisory groups. Enos warns that companies that fail to anticipate the attitudes and policies of their institutional shareholders and proxy advisory firms risk being blindsided at the last moment.

The quality of shareholder communications also has received little attention, according to the results. Only 22 percent of respondents who said their company has taken steps to prepare for SOP reported having an effective shareholder communications strategy in place that includes a process for gathering feedback from institutional shareholders, unions, and/or other constituencies on executive compensation programs.

An executive summary is available here.