Votes in on 'say-on-pay' – investors like it

Investors got their first chance to exercise the muscles they were given under the Dodd-Frank Act in the US to have a "say on pay" at the companies in which they invest. They seem to have liked the experience, but it was tiring and not very much happened. Nonetheless, they would like to do it again next year and the year after, and the year after that. The proxy voting agency Institutional Shareholder Services analysed the results of the 2010 proxy season and determined that investors signalled approval of pay plans at 92.1 per cent of the cases. They voted down proposals at just 1.6 per cent of the cases among the Russell 3000 companies, mainly as a result of concern over links to performance.

"'Say on pay' votes increased investors' workloads, but spurred greater engagement by companies and prompted some firms to make late changes to their pay practices to win support," the firm said. In more than 80 per cent of the cases, they voted to have annual votes on pay policy, rather than once every three years. Moreover, say-on-pay made life easier for directors, at least in one way. There were fewer votes against directors who sit on compensation committees. In the past, activists voted against re-electing directors as a protest over pay. Now with a direct say, their activism followed a different channel.

Source document: The ISS US post-season report is a 36-page pdf file.