The shareholder activist set is getting giddy over Say on Pay. They now count 50 companies agreeing to hold a non-binding up or down vote on the compensation table tucked into the proxy at the annual meeting.

This does not include all of the TARP recipients that are required to have annual advisory votes.

"We are reaching the tipping point," said Timothy Smith, Senior Vice President at Walden Asset Management, in a press release.

Altogether, at least 56 U.S.-based companies have held voluntary "say on pay" votes or have agreed to do so, according to RiskMetrics Group's ISS Governance Services unit.  

Pressure is mounting for more companies to adopt this exercise. Investor groups have filed Say on Pay shareholder proposals at more than 70 U.S. corporations for 2010, according to Walden.

In 2009, more than 75 Say on Pay shareholder proposals came to vote, averaging more than 46 percent support, with 24 majority votes, according to RiskMetrics. In 2008, more than 75 shareholder proposals seeking Say on Pay came to vote, averaging more than 41 percent support with 11 majority votes. In 2007, more than 50 shareholder proposals came to a vote, averaging over 42 percent support with nine majority votes.

If you speak to these shareholder activists, you would think Say on Pay is the greatest thing since the establishment of Democracy.

However, for all the hoopla over this movement, it is really much ado about not that much.

First of all, Say on Pay is simplistic. It basically allows investors to either say they approve of everything contained in the compensation table for all five or six top officers, or not approve everything. They cannot single out individuals they think are fairly paid and those overpaid. They cannot say they approve of the salary and bonus, but not the amount of options awarded. Shareholders also cannot approve or disapprove of a company's methodology for rewarding compensation on performance.

Even worse, the Say on Pay votes are not even binding. In each case, companies can basically say, thank you very much for your opposition, but we aren't changing a thing. So, it really should be called, Suggest on Pay.

In fact, even Deloitte suggested there are a number of critical, unanswered questions related to Say on Pay in an analysis published last spring. For example, it wondered: Should it be expanded to include separate votes on pay philosophy, absolute pay levels, peer group composition, performance metrics, pay mix, retirement benefits, perquisites, severance pay, level of detail in the Compensation Discussion & Analysis section of the proxy or composition of the Compensation Committee?

Deloitte also asked whether there should be an avenue for specific shareholder feedback on individual compensation scheme components, positive or negative?

Until a deeper level of detail is included in Say on Pay policies, it is going to wind up a benign, toothless exercise.

I think more Democracy and change can take place at companies if shareholders have more say in who the directors are sitting on the Board.

Therefore, I think activists should be spending more of their time pressing companies to follow Healthsouth's lead and agree to reimburse the expenses for those who stage successful proxy fights. If you can change a couple of directors on an ineffective Board, you are making changes other investors can believe in. And reimbursing expenses for conducting a separate proxy solicitation is a meaningful incentive.

Ultimately, we finally need the SEC to pass Proxy Access. This would enable certain shareholders to nominate specific directors to stand for election against the company's nominees. The regulator tried to do this a few years ago but then backed off.

Current SEC chairman Mary Schapiro has promised to push for this right in her administration. So far, nothing has advanced.

But, clearly Say on Pay is not going to change very much.