Say-on-pay is working due to the influence of the proxy voting agents – but its affects are as of yet unknown.
Listed companies are taking increasing notice of proxy voting advisory firms when shaping the executive pay packages that are put to shareholders for approval, research published this week has found. Read the rest of this entry »
This week, The Conference Board released a new Director Note titled The Influence of Proxy Advisory Firm Voting Recommendations on Say-on-Pay Votes and Executive Compensation Decisions. The report examines current evidence regarding the influence of third-party proxy advisory firms’ voting recommendations on shareholder proposal voting outcomes, particularly say-on-pay votes. Read the rest of this entry »
By Anthony Galban
Some 25 years ago I attended a crowded and agitated shareholders meeting for a Fortune 500 company. During the meeting, a shareholder held up a large and colorful chart for the meeting attendees to see. The chart showed the change in the CEO’s compensation compared to shareholder return over the past several years. Impressively, the CEO pay had grown by roughly 300%. As I struggled to see the second line charting shareholder return, I noted the flat line running along the x axis indicating little to no growth for shareholders. Read the rest of this entry »
Yesterday ISS published a white paper detailing its new methodology for the pay-for-performance test described in ISS’ 2012 proxy voting policies. ISS’ new approach to evaluating pay for performance alignment consists of two steps:
As I noted in my post about the 2012 ISS Policy Updates, in the lead up to the 2012 voting season, there has been a great deal of discussion about what happens with companies that garnered a of majority shareholder support for the company’s say-on-pay proposal, but not overwhelming majority support. With ISS effectively drawing a bright line around those companies with “truly” passing say on pay votes (more than 70 percent), and those in the “gray” zone (those with more than 50 but less than 70 percent), we asked Yonat Assayag, a Partner with ClearBridge Compensation Group, for her firm’s view on how companies in this “gray zone” prepare for the 2012 say on pay vote. Here is Yonat’s response . . .
As 2011 comes to a close, most public companies have by now had their shareholder advisory vote on their executive pay programs, known as “say-on-pay.” Say-on-pay, an outcome of the Dodd-Frank Wall Street Reform and Consumer Protection Act, requires publicly-traded companies in the U.S. to hold shareholder advisory votes at least once every three years. Read the rest of this entry »
On December 1-2, 2011, directors from across the country participated in the Executive Compensation Director’s Forum presented by The Weinberg Center for Corporate Governance of the University of Delaware and The Conference Board’s Governance Center. At the Forum, directors discussed a wide range of issues related to the challenges of designing and administering appropriate executive programs in a difficult and hard-to-predict economic environment, where compensation decisions are being placed under the microscope by investors, proxy-advisory firms, employees, media and the public. Read the rest of this entry »
The recent Governance Watch webcast, Shareholder Activism in Uncertain Times, raised important questions for both management and boards to consider in the midst of an economic climate that is making many companies particularly attractive to activist shareholders, and potentially vulnerable to aggressive moves that could force a board to take actions that may not be in the best long-term interest of the company or the majority of its investors.
The roundtable discussion was moderated by Ethan Klingsberg, a partner at Cleary Gottlieb Steen & Hamilton LLP, and featured three guests:
Bostjancic started the discussion by summarizing the current economic situation and outlook, noting that although the U.S. economy may avoid falling into another official recession, growth is likely to remain very slow through early 2012. Read the rest of this entry »
Even though shareholders approved most of the executive compensation plans put up for vote in the 2011 proxy season, the tiny minority of failed say on pay votes are getting an inordinate amount of attention for a myriad of reasons.
Those reasons, which reflect an overarching problem between shareholders and companies, range from a pay-for-performance disconnect to poor pay practices to poor disclosure and pay reasonableness, according to a new study by the Council of Institutional Investors (Say on Pay: Identifying Investor Concerns). Based on its interviews with institutional shareholders who voted against say on pay proposals, Farient Advisors LLC, which was commissioned by CII to write the report, found that 92 percent gave pay-for-performance disconnect as the biggest reason for their vote. The other top reasons were poor pay practices (57 percent) and poor disclosure (35 percent). Read the rest of this entry »
There was a snippet of information that caught my eye last week as I was researching the hash tag #corpgov on Twitter: “Equilar terminates agreement with ISS.”
While that news isn’t earth-shattering, it’s what’s not in the press release that this tweet was linked to that could have deep implications for next year’s proxy season. What I’m talking about specifically is executive compensation data. For those not familiar with the Equilar name, it is a California-based provider of total executive compensation information for public companies. So why is a termination of an agreement between Equilar and the proxy advisory firm Institutional Shareholder Services mean anything to corporate secretaries of public companies or others in the corporate governance world? Read the rest of this entry »
Two things are almost certain following Friday’s decision by the U.S. Court of Appeals for the D.C. Circuit in the case challenging the SEC’s new proxy access rules: there definitely will be no proxy access for proxy season 2012 and the number of proxy contests will increase next year.
While I know I’m not going out on a limb to make the first prediction since the court unanimously vacated Rule 14a-11 (which would allow shareholders direct access to the proxy), I believe shareholder groups will take advantage of Rule 14a-8 as a backdoor way toward proxy access. Additionally, there is bound to be some kind of blowback for those directors sitting on companies that had negative Say on Pay votes. Granted, that might take the form of withhold campaigns but many shareholder groups may just opt for the good old-fashioned proxy contest.
Here’s why I believe there will be an uptick in proxy contests and/or shareholder proposals calling for proxy access: Read the rest of this entry »