Say on Pay

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Get comprehensive results in "Say on Pay Reports," in-depth analysis on Say on Pay results in our "Behind the Numbers" series, and insights on how companies are faring in "Vote of the Week."

Report Update: Results for the entire 2012 proxy season; 57 total have failed SOP

This report provides results for the entire 2012 proxy season, covering over 2,200 companies. The majority of companies continued to pass Say on Pay in 2012 with substantial shareholder support, with approximately 91% of companies passing with over 70% shareholder approval. Four new companies announced failures since our last update (PMFG, DFC Global, Oracle, and RBC Bearings), and total failures for the season stand at 57 (2.6% of companies). We will begin to issue Say on Pay updates for the 2013 proxy season in March 2013. Read more

Update: Oracle fails Say on Pay with 41% support

According to an 8-K filing, Oracle is the latest company to announce failing its Say on Pay vote. Oracle received 41% support from shareholders, which represents a year-over-year decrease of 25%. Shareholder and their proxy advisors likely maintained concerns with the high absolute and relative value of CEO pay and other aspects of the company’s pay program (including use of time-based equity, perquisite programs, and CEO pledging of shares). Shareholders were also likely disappointed with the company’s modifications to the pay program following the 2011 vote. Shareholders’ reactions were not contained solely to the Say on Pay proposal. Over 34% of shareholders withheld votes related to Compensation Committee members’ reelections – and 25% of shareholders voted against an amendment to increase shares under the directors’ stock plan. Read more

Report update: 53 total have failed SOP; McKesson receives 62% support, -8% vs. 2011

Since we last updated our report, two additional companies (Iconix Brand Group and Applied Micro Circuits) have failed Say on Pay. Total failures for the season now stand at 53 (or 2.6% of companies). In our “Vote of the Week,” we discuss McKesson, a company that received 62% support in 2012 after receiving 70% support in 2011. The company made many changes to its compensation programs following the 2011 vote; however it appears that shareholders continued to have concerns over the high value of CEO pay (from both a relative and absolute standpoint) and some of the company’s retirement benefits and incentive designs. This will be our final Say on Pay update for 2012. We will issue a full report providing results for the entire 2012 proxy season in January 2013. Please check back on our blog for updates in the meantime. Read more

Report update: Yahoo receives 50% support this proxy season

Total failures for the season now stand at 51 (or 2.7% versus 1% in 2011), with no new additions since our last report. We discuss Yahoo in our “Vote of the Week” – the company received 50% support (49.86% including abstentions as 'against' votes; 50.13% excluding abstentions as 'against' votes), which represents 20% less support this year. Yahoo's vote is likely attributable to continued concerns over company performance, coupled with concerns over severance payouts and changes made to compensation programs in 2011 and 2012. Read more

Report update: 51 total have failed SOP; Freeport McMoRan receives +22% support vs.2011

Total failures for the season now stand at 51 (or 2.7% versus 1% in 2011), with two new additions since last week (Best Buy and Kforce). We discuss Freeport McMoRan in our “Vote of the Week” – the company received 22% more vote support this year, following 46% support in 2011. The year over year increase in vote results is likely due to significant program changes. The company made modifications to its AIP program, reduced total compensation by 40% (as reported in the company's supplemental table), and made governance-related changes. Nonetheless, the company still received an ‘against’ recommendation from ISS given high absolute reported pay levels coupled with negative one?year TSR and other ongoing concerns. Read more

Two more Russell 3000 companies fail SOP; total now at 51

Two more companies – Best Buy and Kforce – have failed Say on Pay, bringing the total for the season to 51. According to CNBC, Best Buy failed Say on Pay after ISS “recommended that shareholders vote against the proposal primary due to the separation package paid to former CEO Brian Dunn.” Brian Dunn received a separation package valued around $5.5m, which included severance of $2.85m and continued vesting of restricted stock grants. Kforce received 39% support from shareholders this year after receiving 85% in 2011. ISS cited concerns with the company’s above-median benchmarking practices and acceleration of equity vesting following a cash sale that resulted in a pre-tax gain; disclosure was clear that the accelerated vesting was intended to offset a tax liability. Reported CEO pay also increased in a year when TSR was down 24%. Read more

A Move Towards Binding Say on Pay in Britain

The UK moved one step closer to requiring companies to hold a binding Say on Pay vote. Yesterday, Business Secretary Vince Cable presented a bill to Parliament that requires companies listed in Britain to hold binding Say on Pay votes at least once every three years and potentially more frequently if the pay program changes. The bill includes two types of Say on Pay votes: 1) Binding vote on prospective pay policy occurs at least once every three years or annually if the company changes its pay policy. Once approved, companies cannot make payments outside the scope of the policy without reapproval. 2) Nonbinding vote on how pay policy was implemented in the previous year, including actual amounts paid. If a company's advisory (non-binding) vote does not pass, the company is required to hold a binding vote on its pay policy the following year. The rules are expected to be approved by Parliament and become law by October 2013. The New York Times has more information and Gibson Dunn explains the details. Read more