2019 Proxy Season Review Part 3—Say-on-Pay Votes and Equity Compensation

Sullivan & Cromwell LLP - August 7, 2019

Continued strength on say-on-pay:

  • Public companies continued to perform strongly on say-on-pay, with support levels averaging over 90% and less than 3% of companies receiving less-than-majority support.
  • Fewer than half of the companies who received less-than-majority support last year achieved over 70% support this year, suggesting low say-on-pay votes have become stickier.
  • ISS negative recommendations on say-on-pay highlight the continued importance of the pay-for-performance assessment category, with the most important factor continuing to be the alignment of CEO pay with Total Shareholder Return (or TSR) in relation to the ISS-determined peer group.
  • The most important qualitative factor was performance standards that are not deemed sufficiently rigorous by ISS or clearly explained.
Broad shareholder support for equity compensation plans, with only two Russell 3000 companies failing to obtain shareholder approval for an equity compensation plan and overall support levels continuing to average around 90%.

Our annual proxy season review memo summarizes significant developments relating to the 2019 U.S. annual meeting proxy season. This year our review comprises three parts: Rule 14a-8 shareholder proposals submitted and voted, ISS negative recommendations and compensation-related matters. This is Part 3. Part 1, which focuses on Rule 14a-8 shareholder proposals, was published on July 12, 2019, and is available here. Part 2, which focuses on ISS negative recommendations for directors, was published on July 25, 2019, and is available here. Details regarding our annual webinar to discuss 2019 proxy season developments can be found here.