The “say on pay” provision of the new Dodd-Frank Wall Street Reform and Consumer Protection Act takes effect beginning in January. Already, public companies and their compensation committees are scrambling to mitigate the risk of a potential “no on pay” vote. Even though a “no” vote is nonbinding (i.e., companies are free to shrug it off), it could create investor relations and reputation issues.

Here’s a possible preview of things to come. The article looks at some of the reasons why Motorola, KeyCorp, and Occidental Petroleum failed to receive majority shareholder support on say-on-pay votes (regarding compensation packages of named executives) this spring.

Say on pay votes are not new.

U.K. shareholders have been voting on executive pay packages for years. What’s more, some 500 U.S. companies also hold say-on-pay votes, including about 100 companies that do so voluntarily and 400 participants in the U.S. Treasury Department’s Troubled Asset Relief Program (TARP) who count say-on-pay votes as a membership benefit.

What is new is the fact that the new Wall Street Reform legislation’s provision greatly increases the number of U.S. companies that will hold say-on-pay votes and the number of shareholders more closely scrutinizing executive perquisites and the degree to which executive compensation is linked to company performance. ###