Say on Pay

Vote of the Week

Vote of the WeekZoom inCurrent Report

Our "Vote of the Week" reports discuss Say on Pay votes and results from specific companies and offers insights on what worked and what didn't.

Vote of the Week: Hecla Mining

In our “Vote of the Week,” we discuss Hecla Mining which received 56% vote support in 2013 after receiving above 85% support in each of the prior two years. We had initially reported that Hecla failed in 2013 as the company received 49% vote support at its annual meeting on May 15th. However, Hecla took the uncommon step of adjourning the portion of the meeting pertaining to the Say on Pay vote until June 14th at which time additional voters and others who changed their mind swung the vote to a passing level. This is the first occurrence of a company adjourning their Say on Pay vote to a later date that we are aware of. We will monitor the impact, if any, this action has on other companies and their SOP voting procedures. Read more

Vote of the Week: Nabors Industries and Tutor Perini

In our “Vote of the Week,” we discuss Nabors Industries and Tutor Perini. Both companies have failed each of the past three years with Nabors receiving 36% support in 2013, 25% in 2012 and 43% in 2011 and Tutor Perini receiving 38% support in 2013 and 2012 and 49% in 2011. We identified both companies due to commonalities surrounding low support including: high CEO compensation combined with poor TSR performance and declining net income and incomplete responses to address prior and current years’ shareholder concerns. In parallel with the failed Say on Pay votes, two directors at Nabors and one at Tutor Perini were not re-elected in 2013. 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

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

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

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

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