Say on Pay

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Get comprehensive results in "Say on Pay Reports," in-depth analysis on Say on Pay results in our "Behind the Numbers" series, and insights on how companies are faring in "Vote of the Week."

Abercrombie & Fitch fails Say on Pay after receiving 56% in 2011

According to the Columbus Dispatch, Abercrombie & Fitch announced at its annual meeting today that shareholders had voted against its executive pay programs, as shareholders “expressed displeasure with the company’s recent stock tumble.” The announcement follows 56% support for Say on Pay in 2011. Abercrombie is the 11th S&P 500 and 46th Russell 3000 company to fail this season. We will be reviewing the specifics of this vote in our “Vote of the Week” feature of our weekly Say on Pay report. Shareholders seemed to have remaining concerns over the high value of the CEO’s executive pay and the CEO’s employment agreement, which entitles the CEO to biannual LTI grants of 2.5% of total shareholder return over six-month periods. Under the agreement, the CEO received two grants of SARs last year – one in March with a grant date fair value (GDFV) of $35m and another in September with a GDFV of $8m – following respective periods of six-month TSR improvement. However, since September-end, the company’s stock price has declined over 50%. Read more

Behind the Numbers: Are shareholders targeting financial companies?

Our weekly Say on Pay report often raises interesting questions about what the data really mean. These questions are addressed in this series. Since the financial crisis, it seems like scrutiny of executive pay has been greater and shareholder sentiment has been more negative at financials compared to other industries. Interestingly, as of June 12, companies in the GICS Financial sector received some of the highest support of any industry. Read more

Report update: 45 failures…and what happened at Nabors/Chesapeake?

With over 1,700 results collected, total failures for the season now stand at 45. Five new companies announced failures this week: Nabors Industries, American Eagle Outfitters, Chesapeake Energy, Epiq Systems, and G-III Apparel. We discuss Nabors Industries and Chesapeake Energy in more detail in our “Vote of the Week” – both companies received significant opposition in both 2011 and 2012. At both companies, it appears shareholders maintained concerns over the pay programs' alignment with performance as well as broader governance practices. A majority of shareholder votes at both companies were cast against new bonus programs and cast in favor of proxy access proposals. At the industry level, health care companies in aggregate have received less support than other industries (5% of companies have failed, while 12% have received vote results below 70%). Consumer staples and financials have received the most support, with only 4% of consumer staple companies and 6% of financial companies receiving vote results below 70%, as compared to the Russell 3000 average of 8.6%. Read more

Four more companies fail Say on Pay

Chesapeake Energy: 20% support in 2012 vs. 58% support in 2011. Shareholders also voted against one other compensation related proposal (approval of the annual incentive plan) and voted for a shareholder proposal relating to proxy access. Additionally, shareholders withheld a… Read more

Say on Pay fails and proxy access passes at Nabors

This week Nabors Industries became the 41st company to fail Say on Pay in 2012 and the fourth to fail two years in a row. Shareholders also voted against two other compensation related proposal on the agenda (approval of incentive bonus plan and approval of stock plan) as well as for a shareholder proposal to seek shareholder approval of future severance agreements (8-K filing here). In addition to the compensation proposals, shareholders also approved proxy access (article from Bloomberg), the first time a proxy access proposal has received majority support at a big company. The next edition of our weekly Say on Pay report will explore the reasons for the failed Say on Pay result in more detail. Read more

Report update: total failed votes at 40; three co’s have failed in 2011 and 2012

To date, 40 companies have failed Say on Pay - roughly 2.5% of companies, compared to 1.4% in 2011. This week, Tutor Perini became the third company to fail in both 2011 and 2012. This week’s Vote of the Week discusses Safety Insurance, the first company we are aware of to receive an ISS ‘for’ recommendation and fail Say on Pay. New additions to the list of failed companies since our report last Wednesday: Tutor Perini, Healthways Inc., United Online, and Digital River. Read more

Safety Insurance Group is first company to fail Say on Pay after receiving an ISS ‘For’ recommendation

Safety Insurance Group received 42% support for Say on Pay after receiving 67% in 2011. We believe this is the first company to fail Say on Pay despite receiving a For recommendation from ISS. Possible reasons for the low 2012 vote include: no specific description of the shareholder outreach process or findings following a relatively low vote in 2011, no meaningful change to pay program to address the 2011 vote or shareholder feedback, and negative TSR in 2011 driven in part by larger than usual underwriting losses due to extreme weather events during the year. (source: Semler Brossy analysis, ISS Governance Analytics). Read more

Vote of the Week: MDC Holdings support up 38% from 2011

MDC Holdings’ Say on Pay vote result increased 38%, from 34% to 72%, after failing in 2011. MDC Holdings made significant adjustments to its incentive programs and reduced CEO pay following its failed vote in 2011; however, proxy advisors expressed concern over some legacy pay elements. Read more