Equilar’s “The Effects of Say on Pay Failures” reveals the changes that companies made to their 2018 pay programs in response to failed say-on-pay votes the preceding proxy season, and the impacts of those program changes as measured by say-on-pay vote outcomes this proxy season-to-date. The study results may help inform other companies’ consideration of pay program responses to a failed or subpar vote.
Post say-on-pay failure program tweaks most commonly consisted of changes in compensation metrics or weighting, a shift toward performance equity, and/or a reduction in overall pay/positioning via removal of unique or one-time incentives – with most companies making at least two changes. This graphic illustrates the effectiveness of 2018 program changes subject to approximately 30% of the still-pending votes:
As shown, a reduction in overall pay/positioning yielded the greatest positive impact on shareholder support, followed by changes in metrics/weighting and a shift toward performance equity.
Access additional information & resources on our Say-on-Pay and Proxy Season 2019 pages. This post first appeared in the weekly Society Alert!