March 21, 2012
Three Papers: Proxy Advisor Influence on Say-on-Pay/Impact of CEO Pay on SOP Support
– Broc Romanek, CompensationStandards.com
Last week, a new report entitled “The Influence of Proxy Advisory Firm Voting Recommendations on Say-on-Pay Votes and Executive Compensation Decisions” by The Conference Board, the NASDAQ OMX Group, and Stanford University’s Rock Center for Corporate Governance was issued. The title explains what the report is about. And Equilar released a paper entitled: “A Different View of Say on Pay Voting Results in the S&P 500” that analyzes SOP votes by counting only the votes of non-management shareholders.
And also last week, ISS released a white paper entitled – “Parsing The Vote: CEO Pay Characteristics Relative to Shareholder Dissent” – that analyzes how the level of CEO pay impacts shareholder support for say-on-pay, whose findings include:
– CEO pay magnitude, along with poor total shareholder returns (TSR), helped drive investor dissent on 2011 “say on pay” resolutions.
– For example, average CEO bonuses for large capital, S&P 500 firms with low MSOP support stood at $3 million, compared with $1.1 million at higher supported peers.
– The value of “all-other-pay,” including perks and exit compensation, for CEOs at S&P 500 companies with low MSOP support was 138 percent greater than that for high support peers, while that for option grant values was 127 percent greater.