The number of companies whose executive pay plans failed to receive majority support from shareholders as of July 2 is down slightly from mid-July last year (55 vs. 58), with the number of S&P 500 failures slightly higher than for all of 2019 (nine vs. seven) and each of the prior years except 2012. In the past, S&P 500 companies have enjoyed more say-on-pay support than smaller companies.
Reasons for failures. Reasons some investors cited for voting against say on pay at the nine S&P 500 company failures, aggregated by Proxy Insight, were driven by pay-for-performance disconnects, including:
No other surprises despite pandemic. Executive pay decisions for 2019 predated the market gyrations brought on by the COVID-19 pandemic and say-on-pay vote results have been generally unaffected. Most indicators of shareholder support remain strong so far and consistent with prior years:
Say-on-pay summary results, 2011 to 2020 (as of July 2, 2020)
Looking ahead. The reasons for the say-on-pay failures indicate areas of concern investors are likely to focus on when they next vote on say on pay, including actions companies take to address the volatile market and global pandemic. Companies whose fiscal year ended June 30 will be the first to see the impact, and should engage with shareholders and ensure their proxy disclosure explains the rationale for pay decisions. See Managing incentives during uncertain times for a discussion of 2020 compensation decisions in response to COVID-19 and Proxy advisers weigh in on COVID-19's impact on pay and governance.
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