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:


  • Modification of performance targets to make them easier to achieve
  • Lack of quantifiable (vs qualitative) performance metrics
  • Lack of transparency around performance goals, lack of goal rigor, and/or use of discretion
  • One-off equity grants, especially when not sufficiently performance-based
  • Mega grants covering current and future years
  • Payment of cash severance on retirement in lieu of forfeited equity

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:


  • Out of 1,729 all-size companies reporting results, 43 (2.5%) have received less than 50% support, a higher rate than 47 out of about 2,100 (2.2%) as of June 12, 2019.
  • Votes continue to average about 91% in favor of companies’ executive pay programs.
  • Favorable votes of 90% or higher at individual companies are similar to last year (down slightly from 77% in 2019 to 76% in 2020 for S&P 500 companies, and up slightly from 73% to 75% for all companies).
  • ISS has recommended shareholders vote against fewer say-on-pay proposals (10% so far this year compared with 13% as of June 12, 2019 and 14% for all of 2019).

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.


To learn more download the full report here.

Carol Silverman
Carol Silverman

Partner, Executive Law & Regulatory Group

Amy Knieriem
Amy Knieriem

Principal, Executive Law and Regulatory Group

Adam Bogucki
Adam Bogucki

Principal Executive Compensation Consultant

Michael Yoon
Michael Yoon

Senior Analyst

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