January 8, 2015
Study: Alignment Gap Between Say-on-Pay Voting & Creating Value
– Broc Romanek, CompensationStandards.com
Here’s a new study authored by Organizational Capital Partners (and commissioned by the Investor Responsibility Research Center Institute (IRRCi)) that finds:
– Average Say-on-Pay support vote across the sample was 82% for 32 low performing companies (return on invested capital – or ROIC – less than the cost of capital and negative relative total shareholder return) and 84% for 32 high performing companies (ROIC greater than the cost of capital and positive relative total shareholder return).
– Median vote was 90% for the low performing companies and 96% for high performing companies.
– There was not a meaningful difference between the recommendations of the two major proxy advisor firms, ISS and Glass Lewis. ISS recommended for 84% Say on Pay approval at value destroying companies and for 81% of value creating companies. Glass Lewis recommended for votes at 72% of the value destroying companies and 81% of the value creating companies.