As I said last week, 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 (whoever came up with Say When on Pay deserves a round of applause).
In today’s blog we’ll deal with the results to date for Say on Pay votes.
Half way through last week, over 100 votes had been recorded on Say on Pay. So far, only two companies have received majority votes against approval of executive pay, those at Jacobs Engineering and Beazer Homes. I have blogged on both of these. But though there have only been a few absolute majority votes against, there has been a slightly larger number of very significant minority votes against.
One of the earliest votes was Monsanto, with 35.08% of shareholders disapproving of executive pay. “We won, ‘soy ’ there,” said Monsanto. But to describe this as a “victory”, once you’ve “rounded up” (sorry, you can’t not, can you?) the nay sayers, it’s a bit of a Pyrrhic victory.
However, there have been four other annual meetings more recently with votes against Say on Pay in the region of 47% to 49%. There is no way that 51-53% support can be considered an endorsement of pay policies and it would be a foolish compensation committee that did not seek shareholder input as to the exact cause of the discontent.
We at GovernanceMetrics, as I’m sure you know, are not making recommendations on voting, rather we are publishing our Executive Pay Scorecards for the S&P 500 which indicate those companies that we feel exhibit serious concerns about executive compensation and letting shareholders make up their own minds.
Paul Hodgson – Senior Research Associate