Hercules Offshore: first company to fail SOP in both 2011 and 2012

Hercules Offshore is the most recent company to fail Say on Pay — the 26th of the season — according to its 8-K filing on Friday. 48% of shareholders voted for Say on Pay. Interestingly, Hercules Offshore also failed in 2011 (with 41% support). Our initial take of the factors influencing the vote: despite significant governance-related changes made (eg, removal of tax gross ups and share recycling, modification of equity terms to institute minimum vesting requirements, adoption of an anti-hedging policy), shareholders and their proxy advisors were concerned about increased pay year-over-year, special retention and performance awards, and specific compensation elements/practices. CEO pay increased ~110% year-over-year (as reported in the Summary Compensation Table). Additionally, the company’s annual bonus program is tied to six-month performance — and the company uses “duplicative” performance measures in both its annual and long-term plans. Following the vote result, the company announced that it would reconsider several elements of its incentive programs. We’ll have more to report in our “Vote of the Week” feature on Wednesday