The number of S&P 500 companies whose executive pay plans failed to receive majority support from shareholders is up compared to last year. Nine S&P 500 companies have failed say on pay as of May 29, which exceeds the total number of seven for all of 2019 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, but this may be changing.
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:
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 with June 30 fiscal year ends 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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