Say on Pay Reports

Our special topic this week examines director election votes from 2013 to 2015 thus far. Over 90% of director elections received vote support above 85% and only one out of two hundred elections failed. In the year following a failed Say on Pay vote, Compensation Committee non-chair members are four times more likely to receive a recommendation of ‘Withhold’ or ‘Against’ from proxy advisory firm ISS. To date 1,574 Russell 3000 companies have had their Say on Pay votes and 93% are passing with above 70% support. Eleven companies have failed since our last report: Astoria Financial, Basic Energy Services, BBCN Bancorp, Checkpoint Systems, Cornerstone OnDemand, DexMedia, Eagle Bancorp, Masimo, Tutor Perini, Vertex Pharmaceuticals, and W.R. Berkley. 32 Russell 3000 companies (2.0%) have failed Say on Pay in 2015. ISS is recommending ‘Against’ Say on Pay proposals at 10% of companies. Read more

Our special topic this week features reasons for Say on Pay failure. We have examined the 21 companies that have received less than 50% vote support on Say on Pay thus far in 2015 to assess probable reasons for failure. We found that poor pay for performance relation continues to be the most frequent reason for failure but that failure due to problematic pay practices has declined in 2015 compared to previous years. Our data also shows that while the percentage of companies failing Say on Pay in 2015 is relatively consistent with prior years, the number of probable reasons for failure has declined from an average of four in 2014 to an average of three in 2015. To date 1,232 Russell 3000 companies have had their Say on Pay votes and 93% are passing with above 70% support. Thirteen companies have failed Say on Pay since our last report: Acacia Research, BankUnited, Carriage Services, Darling Ingredients, Dynamic Materials, Hospira, Insulet, Kate Spade & Co., Knoll, Luminex, Mack-Cali Realty, SPX, and Superior Industries International. Proxy advisory firm ISS is recommending ‘against’ Say on Pay proposals at 9% of companies. Read more

Our special topic this week features an industry breakdown of Say on Pay votes. We have examined vote results by GICS sector to identify how results have moved year-over-year by industry. Our data shows that Information Technology, Consumer Discretionary, and Telecommunication Services companies have received the highest proportion of vote results below 90%. We also find a correlation between average Say on Pay results and ISS recommendations in every GICS sector. To date 678 Russell 3000 companies have had their Say on Pay votes and 94% are passing with above 70% support. Four companies have failed Say on Pay since our last report: Allegheny Technologies, Customers Bancorp, TCF Financial, and Walter Energy. Eight Russell 3000 companies (1.2%) have failed Say on Pay in 2015. Proxy advisory firm ISS is recommending ‘against’ Say on Pay proposals at 7% of companies. Read more

Our topic this week features Trends in Mutual Fund Say on Pay Votes—we have analyzed Form N-PX filings from U.S. management investment companies over the past four years to determine how mutual fund votes on Say on Pay proposals have changed over time. Our data shows a convergence in the rate mutual funds vote in line with proxy advisory firm ISS towards 92%. We also see a strong correlation between mutual fund votes and overall Say on Pay results. To date 257 Russell 3000 companies have had their Say on Pay votes and 94% are passing with above 70% support. Two new companies have failed Say on Pay since our last report: Biglari Holdings and Cogent Communications Holdings. It was the third consecutive failure for both companies. Four Russell 3000 companies (1.6%) have failed Say on Pay in 2015. Proxy advisory firm ISS is recommending ‘against’ Say on Pay proposals at 7% of companies. Read more

Our topic this week features Trends in Say on Pay DEFA14A Responses – we have studied DEFA14A filings in response to proxy advisors for current Russell 3000 companies. Our analysis indicates that the number of companies using this supplemental filing to respond to proxy advisors has decreased following a peak in 2012. We also find that large cap companies have the highest rate of DEFA14A filings. To date, 158 Russell 3000 companies have had their Say on Pay votes – 92% are passing with above 70% support. No new companies have failed Say on Pay since our last report; two companies (1.3%) have failed thus far in 2015. Proxy advisory firm ISS is recommending ‘against’ Say on Pay proposals at 10% of companies. Read more

Our topic this week features Trends in Equity Plan Proposals – we have examined equity plan proposal trends for current Russell 3000 companies to investigate the degree to which the introduction of Say on Pay in 2011 has impacted vote outcomes for equity plans. Our data indicates that companies that do not receive majority support for Say on Pay are 10x more likely to have their equity plan voted against by shareholders. To date, 148 Russell 3000 companies have had their Say on Pay votes – and 92% are passing with above 70% support. No new companies have failed Say on Pay since our last report; two companies (1.4%) have failed thus far: Nuance Communications and Schnitzer Steel Industries. Proxy advisory firm ISS is recommending ‘against’ Say on Pay proposals at 11% of companies thus far in 2015. Read more

To date, 134 Russell 3000 companies have had their Say on Pay votes – and 92% are passing with above 70% support. Two companies (1.5%) have failed Say on Pay thus far: Nuance Communications and Schnitzer Steel Industries. Of companies with five years of Say on Pay votes, 104 (94%) have passed all five years, six companies (5%) have passed in three years and failed in one year, and one company (1%) has passed in three years and failed in two years. Proxy advisory firm ISS is recommending ‘against’ Say on Pay proposals at 11% of companies thus far in 2015. Our topic this week features "Predictions for the 2015 Proxy Season." Read more

This report provides the full year of 2014 Say on Pay vote results, covering more than 2,500 Russell 3000 companies that held votes in calendar year 2014. The majority of companies continued to pass Say on Pay with substantial shareholder support: approximately 92% of companies passed with over 70% shareholder approval. 60 Companies (2.4%) failed Say on Pay. Five companies failed since our last report update: Celadon Group, Cheniere Energy, Energy XXI, Globe Specialty Metals, and Oracle. We will begin to issue Say on Pay updates for the 2015 proxy season in March 2015. Read more