The art of guiding the conversation: about executive pay, that is. Take the opportunity to tell your story from a fresh perspective.

• Author: Ferracone, Robin A.
• Position: COMPENSATION AT WORK

It's that time of year again--at least for those companies with calendar fiscal year ends--when you have the opportunity to talk with your shareholders about the "year in review" around executive compensation.

In past years, there has been a tendency to dust off the prior year's proxy, make a few edits, and update the numbers. After all, writing proxies these days is a prodigious task and who wants to start over? But this year, perhaps driven by Dodd-Frank and say on pay, there is new energy around companies telling their stories from a fresh perspective. As companies go about crafting the CD&A, a number of questions are coming to mind. These include:

* The CD&A has gone beyond the point of being a long missive and is approaching tome-like proportions. How can we tell our story in a concise yet complete way?

* Should we begin with an executive summary? Is this helpful, or does it just add to the bulk?

* What is the best way to organize the discussion around new pay arrangements for 2011?

* Companies must add say on pay and "say on frequency" votes to this year's proxy. Should companies recommend an annual, biennial, or triennial frequency vote, or should they simply abstain?

* The SEC will continue to write new rules this year pursuant to Dodd-Frank. While most companies will not be required to report on new disclosures like pay for performance until 2012, should they get ahead of the game and report on these items anyway?

We at Farient Advisors read a great number of proxies in working with clients. We also have written our share of CD&As. Through this work, we have developed some points of view about how companies can most effectively communicate with shareholders and invite commendation rather than criticism around the logic, decisions, and transparency of executive pay.

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First of all, we suggest a meeting between the proxy writers and members of the legal, HR, and outside counsel and consulting teams to articulate and organize the messages that they really want to get across to shareholders. Even if last year's CD&A was entirely satisfactory, this is a useful exercise as it will help clarify the story, and determine the content for an executive summary, if needed.

And, while we're on the topic of an executive summary, many CD&As are now so long that they stretch to over 25 pages of fine print and could use an executive summary.

Second, we do not regard say on frequency as a significant issue. Our advice is to...