The Advisors' Blog

– Subodh Mishra, ISS Governance Exchange

Two compensation-related proposals are making the rounds this year in numbers equal to or greater than in 2012. The first, calling on executives to retain a significant portion of their equity awards until reaching retirement age, has been filed at more than 30 companies, according to ISS data, the bulk of which remain pending at companies including Apple, Hewlett-Packard, and others. Two resolutions have been withdrawn–including an AFSCME filing at Express Scripts Holding Company–and one has gone to a vote. At heavy truck manufacturer Oshkosh, the resolution drew 22.4 percent of votes cast “for” and “against,” slightly less than last year’s average of 24.5 percent spread across 31 proposals voted.

Stock retention filings topped out at 38 last year with more than two-thirds of those voted receiving support in the 20-30 percent range.

ISS is tracking a jump in the number of resolutions seeking to bar the accelerated vesting of equity awards upon a change-in-control. Roughly a dozen of these proposals came to a vote in 2012 with average support touching nearly 40 percent of votes cast “for” and “against” out of 13 resolutions filed. This year, the number of filings has doubled to more than 28 disclosed as of Feb. 1, thanks to a stepped up campaign by retail investors, though companies have responded to the campaign by seeking omission at the SEC.

Notably, more than one-quarter of the resolutions have been omitted at the SEC for reasons including “vague and misleading” resolved clauses, as well as being substantially duplicative of proposals being put forward by management. The SEC continues to deliberate on another four filings, suggesting the final tally of those going to a vote may mirror last year, despite a marked uptick in the volume of filings.

Meanwhile, a proposal filed by the United Brotherhood of Carpenters and Joiners of America calling on companies to change the frequency of the say-on-pay vote from annual to triennial failed to gain traction, with a number of issuers seeking to omit the resolution. The proposals, expected to number in the dozens for 2013, were challenged at the SEC by companies including PNC Financial Services Group, Occidental Petroleum, Abbott Laboratories, and Verizon Communications, with a number of companies arguing the Carpenters’ proposal would conflict with their own say-on-pay resolution and that the labor fund’s call had already been implemented though previous say-on-pay frequency votes. The Carpenters’ ultimately withdrew the resolutions, acknowledging its decision to do so was “based on its recognition that there is little interest among [p]roposal recipients to allow a new say-on-pay frequency vote at this time.”