The Advisors' Blog

– Keith Johnson and Dr. Daniel Summerfield

As noted in our recent paper, opponents of say-on-pay have cited a survey done for the Center on Executive Compensation of 20 of the largest investors that found only 25 percent of large institutional investors support say-on-pay.

Proponents of say-on-pay found the survey to be disingenuous. It was narrowly targeted to primarily poll institutional investors that have recognized conflicts of interests associated with the marketing their services to corporate executives. Few people were surprised to learn that large institutional investors with conflicts of interest were more reticent to support say-on-pay than shareholders generally.

We already know that 42–43% of shareholders support say-on-pay from voting results on resolutions over the last two years. From a CFA Institute survey, we also know that 76 percent of investment industry professionals support say-on-pay. What the largest and most conflicted few institutional investors might think about say-on-pay tells us more about how conflicts influence their judgment than it says about shareholder support for the concept. The fact is that nearly half of voting shareholders have consistently supported say-on-pay. Given market events of the past few months, we expect the level of support to grow.