June 14, 2011
More on “Say-on-Pay Failures: Differences for Smaller vs. Larger Companies”
– Broc Romanek, CompensationStandards.com
Quite a few members weighed in on my recent blog regarding how it appeared that the smaller companies were failing to get majority support for their say-on-pay compared to larger companies. One group of members remind us that the truly small companies have not yet even been required to put say-on-pay on the ballot as the SEC gave them a two-year exemption when it adopted the say-on-pay rules.
And then there are those that challenged the assumption that smaller companies were leading the way in failures altogether. For example, Ken Bertsch, head of the Society of Corporate Secretaries, provides this useful analysis of the numbers:
By my numbers, 32 proposals that failed to receive majority votes by my count include three large-caps (about 1.0% of those with market cap over $10 billion), nine mid-caps (1.3% of companies with $2 billion to $10 billion in market cap) and 18 small-caps (1.0% of companies with $112 million to $2 billion in market cap).
The numbers are small, but at least on the surface do not support a view that small-caps face greater challenges in the vote. Mid-caps do seem to have more losing votes, however, although a the small numbers make it difficult to make have much confidence in assertions at this point. Still, maybe less investor outreach at firms below large-cap levels does have an impact, but balanced at smaller companies by greater concentration of ownership (and more inside ownership).