Say on Pay

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The latest news, articles and reports on Say on Pay, including insights from Semler Brossy experts on trends and lessons learned from Say on Pay results.

Report update (06/05/13): Healthways and Hercules Technology Growth Capital fail SOP

We collected results for 155 more companies this week, bringing our total to 1,539 for the season. This week, we found two more companies that failed Say on Pay, bringing our total to 29 (Healthways and Hercules Technology Growth Capital). Year-over-year, results have improved ~1%; companies that failed in 2012 have received significantly more support in 2013 (on average, +43%). Read more

Vote of the Week: Kilroy Realty

In our “Vote of the Week,” we discuss Kilroy Realty, which received 22% vote support in 2013 after receiving 30% support in 2012 and 49% support in 2011. Kilroy's reduction in support and third consecutive failure may be attributable to the high value of CEO pay, high target annual incentive values and discretionary nature of the program, dual performance conditions that allow for multiple opportunities to earn performance awards, and amendments to the CEO's employment agreement that increased severance payments upon termination without cause or related to a change-in-control significantly. A proxy advisor also recommended against all directors with the exception of the Chairman of the Board/ CEO. All directors recommended against by the proxy advisor failed to gain election, with an average vote result of 41%. Read more

Report update: 10 new companies below 50%

We collected results for 309 more companies this week, bringing our total to 1,384 for the season. This week, we found ten more companies that failed Say on Pay, bringing our total to 27. These companies include: Alexandria Real Estate Equities, Annaly Capital Management, Atlas Air Worldwide Holdings, Boston Properties, Dynamic Materials, Geron, Kilroy Realty, RadioShack, Strategic Hotels & Resorts, and Ultimate Software Group. Year-over-year, fewer companies are failing Say on Pay (to date, 2.0% of the sample; 2.6% of the sample failed in 2012) and receiving ISS 'against' recommendations (to date, 12% of companies; this compares with 14% of companies in 2012). Read more

Vote of the Week: Alexandria Real Estate Equities

In our “Vote of the Week,” we discuss Alexandria Real Estate Equities, which received 8.7% vote support in 2013 (the lowest we have seen) after receiving a 80% vote in 2012 (year-over-year decrease of ~71%) and 63% in 2011. This reduction in support is likely due to above-market CEO pay levels during a period of sustained low performance, a 2013 equity grant to the CEO above prior levels following a large special award in 2012 associated with renegotiating his contract, and structural changes that have not addressed underlying concerns with the pay design. Read more

Report update: seven new companies below 50%

We collected results for 257 more companies this week, bringing our total to 1,075 for the season. This week, we found seven more companies that failed Say on Pay, bringing our total to 17. These companies include: Apache Corp, Everest Re Group, Gentiva Health Services, Hecla Mining, Middleby Corp, OraSure Technologies, and Volcano Corp. Year-over-year, fewer companies are failing Say on Pay (to date, 1.6% of the sample; 2.6% of the sample failed in 2012) and receiving ISS 'against' recommendations (to date, 12% of companies; this compares with 14% of companies in 2012). Read more

Vote of the Week: Prudential Financial

In our “Vote of the Week,” we discuss Prudential Financial, which received 78% vote support in 2013 after receiving a 96% vote in 2012 (year-over-year decrease of 18%). Proxy advisors cited positive factors including a limited CEO pay increase of 3% year-over-year and a mandatory deferral of a portion of both short-term and long-term incentives. Despite a few noted positive changes, the lower support in 2013 may be due to: pay and performance disconnect (per proxy advisors), discretionary aspect included in the annual bonus plan, and relatively high bonus targets and opportunities. Read more

Report update: four new companies with support below 50%

We collected results for 278 more companies this week, bringing our total to 818 for the season. We continue to see high support, with 94% of companies passing with over 70% shareholder approval (this is slightly higher than in 2011 and 2012). Year-over-year, we observe that fewer companies are failing Say on Pay (to date, ten companies this year, or 1.2% of the sample; 2.6% of the sample failed in 2012) and receiving ISS 'against' recommendations (to date, 11% of companies; this compares with 14% of companies in 2012). Four new companies failed this week: AXIS Capital Holdings, Comstock Resources, Golden Star Resources, and Stillwater Mining. Read more

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