Say on Pay

Behind Say on Pay

Behind Say on PayZoom inDownload PDF

We offer insights into Say on Pay vote results, answering questions about what SOP data really means in our “Behind the Numbers” series and diving into the potential drivers of specific company vote results in our “Vote of the Week” reports.

Vote of the Week: Comstock Resources

In our “Vote of the Week,” we discuss Comstock Resources, which received 33% vote support in 2013 after receiving a 35% vote in 2012. Sustained low support may be due to concerns over annual cash bonuses that are determined by 50% financial performance and 50% discretion (we note that the discretionary piece of the annual cash bonus was paid above target, while the formulaic component was paid below target), benchmarking of CEO pay above median against a peer group of larger companies, and above-median CEO pay despite negative TSR on a one-, three-, and five-year basis. Read more

Report update: Coca Cola receives 77% support after receiving votes above 90% in both 2012 and 2011

We collected results for 121 more companies this week, bringing our total to 349 for the season. Thus far, 94% are passing with above 70% support -- and six companies have failed thus far (with one new addition from last week - Dendreon Corp). We continue to notice similar trends year over year, with average vote results improving approximately 1%. As with last week, we have noticed that ISS is recommending 'against' fewer companies this year (10% of companies, as compared with 14% in 2012 and 12% in 2011). In our “Vote of the Week,” we discuss Coca Cola, which received 77% vote support in 2013 after receiving votes above 90% in both 2012 and 2011. The decrease in vote support is likely driven by a change in proxy advisor support due to below median TSR performance relative to industry and the S&P 500, high relative CEO pay, and annual bonus payouts above target for four consecutive years. Read more

Vote of the Week: Kforce

In our “Vote of the Week,” we discuss Kforce, which received 98% vote support in 2013 after receiving votes of 39% in 2012. Following the 2012 outcome, Kforce engaged with major investors (covering 60% of stock outstanding), as well as proxy advisors, to discuss its program and potential modifications. Kforce made significant changes to its programs: it reduced CEO pay levels, modified its go-forward pay framework to address prior concerns with its annual incentive program and long-term incentive pool allocation, and improved governance practices by instituting a clawback and anti-hedging policy and enhancing share ownership guidelines. Read more

Vote of the Week: Biglari Holdings

In our “Vote of the Week,” we discuss Biglari Holdings, which received 33% vote support in 2013 after receiving votes of 87% in 2012 and 85% in 2011. Biglari received a decrease in support despite positive total shareholder return performance. Investors and their proxy advisors may have maintained concerns about high absolute and relative pay levels for the CEO, rigor of performance goals, and limited linkage to shareholder returns. Read more

Vote of the Week: Tyco

In our “Vote of the Week,” we discuss Tyco, which received 69% vote support in 2013 after receiving votes of 95% in 2012 and 71% in 2011. Tyco received a decrease in support despite strong total shareholder return performance and positive investor reaction to its September 2012 corporate spin-off. Investors and their proxy advisors likely maintained concerns about the value of the former CEO’s termination package. Read more

Behind the Numbers: A Reversal of Fortunes — Understanding the Factors that Drive a Significant Reduction in Support from One Year to the Next

Receiving strong support for Say on Pay in one year is certainly no guarantee for future Say on Pay success. While only a small percentage of companies see a significant reduction in support from one year to the next, the low frequency of this event belies the significant risk companies may face if they become too complacent in their approach to Say on Pay. In this article we examine the factors that drive a reversal of Say on Pay fortunes so that companies may be better prepared to address potential vulnerabilities. Read more

Vote of the Week: Hewlett-Packard

In our “Vote of the Week,” we discuss Hewlett-Packard, which received 76% vote support in 2013, following votes of 77% in 2012 and 48% in 2011. Hewlett-Packard originally received an ‘against’ recommendation from ISS, but the recommendation was reversed following additional changes to the pay program for 2013. Read more