The two big items on the governance proposals front this year are, somewhat unusually, management proposals:
- the advisory vote on executive compensation, and
- the advisory vote on the frequency of the advisory vote
These are better known as Say on Pay and Say When on Pay.
So let’s deal with Say When on Pay in this blog.
I pulled out some data from our own Board Analyst product on both these proposals and, though it’s still early in the proxy season, the results would seem to be indicative of future results.
First of all, I pulled out information on almost three hundred frequency votes. Although there was a strong impression that corporations were overwhelmingly recommending a vote every three years, this turned out not to be the case. Just as many recommended a vote every year, and only very small percentages recommended a biennial vote or made no recommendation at all.
The results of the voting show a very clear preference, however.
Out of over 100 votes cast so far, the overwhelming majority of shareholders called for an annual vote. At 83 companies, the majority, or at the very least the largest proportion of shareholders supported an annual vote, compared to only 17 companies who called for a vote every three years. What’s more, many of those opting for a vote every three years are controlled companies where public shareholders didn’t have a chance anyway.
And while it is true that ISS and Glass Lewis have both been consistently recommending annual votes, most shareholders, at least our clients, had opted for that recommendation anyway.
It is early days for the eventual adoption of the frequency vote. Where a decision has been made, annual votes lead the way again. But of those companies that have “announced” what they plan to do, almost two-thirds have said they are making “no recommendation” thus far. Oddly, given that few shareholders voted for it, almost as many companies have adopted a biennial vote as have adopted an annual one.
Paul Hodgson – Senior Research Associate