Say-on-pay proxy outcomes – less than meets the eye?

We're coming to the end of the proxy season in the US, the first since the Dodd-Frank Act gave shareholders a right to vote on pay policy at listed companies. According to the governance consultants at Pay Governance, it proved something less than a revolution. Votes at several thousand annual meetings showed that shareholders voted in favour of the boards' plans for pay fully 98 per cent of the time. "Given the abundance of politically driven criticism, rhetoric and attendant media coverage that preceded SOP's debut, many believed that most shareholders would deliver a negative message," said managing partner Ira Kay in a blog entry at Harvard Law School. "Yet the opposite occurred." Using figures from the proxy voting service ISS, Kay said that when ISS recommended in favour of the company's own proposal, the plan passed every time. When ISS recommended against it, however, the acceptance rate fell, but nonetheless 87 per cent of the policies still won shareholder backing. Pay Governance drew several conclusions, one of which was the companies had done their homework in preparing for the annual meeting. While some critics argued that say-on-pay was a damp squib, Pay Governance isn't so sure. "Our view is that SOP has been a resounding success, and that the high passage record reflects shareholders’ general endorsement of the executive pay model," Kay wrote.

Source document: The Harvard Law School blog post gives further analysis.