Why Do Say-on-Pay Results Remain Consistent Year After Year?

Lawyers talking outside courtroom

As of mid-July, shareholder support for executive pay programs remains strong and consistent with most prior years.

  • Votes continue to average about 90% in favor of companies’ executive pay programs.
  • The annual rate of companies that failed to receive majority support in 2019 continues to hover around just 2%, which is also consistent with prior years.

As noted in the table below, each year since say on pay became mandatory, about three-quarters of companies received support above 90%. Although only a fraction of companies fail to receive majority support, support above 50% shouldn’t be viewed as a “passing grade”: Favorable votes below 70% or 80% can trigger increased scrutiny from shareholders and proxy advisers.

Say-on-Pay Summary Results, 2011‒2019

*As of July 12, 2019

The longer-term picture looks somewhat different: Over the nine years since say-on-pay voting became mandatory, about 400 companies – roughly 14% of Russell 3000 companies -- failed to receive majority support at least once, as shown in the table below. However, more than 80% of the companies that have failed to receive majority support failed, only once. Companies are listening to the messages shareholders are sending through say-on-pay voting.

Summary of Companies That Failed Say On Pay at Least Once Since 2011 as of July 12, 2019

Why Say-on-Pay Results Remain Consistent Year after Year

As the data shows, say-on-pay results have remained fairly consistent from year to year. This is in part because companies are responding to low vote results by changing their pay programs, or making changes proactively to avoid negative feedback. Before the advent of say on pay in 2011, shareholders could demonstrate their dissatisfaction with a company’s pay and governance practices only by voting against compensation committee members and other directors. Today, more companies are talking with their investors to understand and address the concerns raised by shareholders and proxy advisers through the say-on-pay process.

How do your organization’s say-on-pay vote results fit into this broader, longer-term picture and what can you do to maximize shareholder support for your executive pay program?

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