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.

Vote of the Week: Navistar

In our "Vote of the Week," we discuss Navistar, which received an 18% vote (the lowest we have seen) in 2013 after receiving votes of roughly 70% in 2012 and 95% in 2011. The reduced support may be attributable to concerns from shareholders and their proxy advisors on the former CEO's retirement package, which consisted of a severance payment of ~$8m and pension benefits of ~$17m, coupled with negative TSR over the most recent 1-, 3-, and 5- year period, and 'retesting' provisions on the Company's performance-based cash program. Read more

2013 report: Three failures thus far, Apple receives a 61% favorable vote

To date, 124 Russell 3000 companies have had their Say on Pay votes - and over 95% are passing with above 70% support. Thus far, three companies have failed Say on Pay (Nuance Communications, Digital Generation, and Navistar). Proxy advisory firm ISS is recommending against Say on Pay proposals at 11% of companies in 2013 (compared to 14% in 2012 and 12% in 2011). Read more

Vote of the Week: Apple

In our "Vote of the Week," we discuss Apple, which received a 61% favorable vote after receiving votes above 80% in both 2012 and 2011. The decrease in the Say on Pay vote may be attributable to criticisms from proxy advisors on large, non-performance based biennial grants to all NEOs (excluding the CEO), coupled with lack of stock holding requirements and low levels of stock ownership across the NEO team. Shareholders may have also been influenced by a 31% drop in TSR since the end of fiscal-year 2012. Read more

Ralcorp acquisition approved overwhelmingly but Say on Golden Parachute vote did not receive majority support

Last week Ralcorp’s shareholders approved the company’s merger with ConAgra Foods with over 99% support. However, the advisory vote on the payments associated with the change in control received only 45% support, with 48% voting against and 6% abstaining. Say on Golden Parachute votes are non-binding shareholder votes on compensation arrangements associated with mergers and acquisitions. The vote is effective for all merger proxies filed after April 24, 2011. Read more

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

Linking Executive Pay and Performance

Say on pay has shed light on companies’ ability to relate pay and performance. Blair Jones, CCP, CECP, Managing Director at Semler Brossy, discusses companies’ shift to other definitions of pay, including realizable pay. 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