The Advisors' Blog

– Liz Dunshee

Here’s the intro from this Pearl Meyer memo:

We researched 10 years of say-on-pay proxy advisory recommendations and results to understand how common it has been for a company to receive an “Against” vote recommendation or low say-on-pay support in a given year. The results are illuminating; more than 40% of Russell 3000 companies have received an “Against” vote recommendation from ISS, and almost half have received low say-on-pay support. The trend also suggests that these percentages will continue to increase each year. Therefore, we believe companies would be well served to conduct regular, proactive stockholder outreach and engagement to mitigate the impact of a future negative vote recommendation.

The memo offers 5 tips for planning say-on-pay engagement. And as this Georgeson blog concludes – based on an analysis of recent voting behavior of the top 10 investors at companies that have failed say-on-pay – success really hinges on understanding your shareholders’ unique concerns:

Lack of strong correlation among investors’ votes at these failed say-on-pay proposals suggests that how one of the investors voted was not a strong signal as to how another one would vote. Early negative votes by some of these investors does not mean that others among these investors would be non-supportive, as well. It also means that engagement with investors should not be a one-size-fits all approach. Even among the key index investors, there are differences in the likelihood of gaining their support and the issues they focus on. Companies should understand the key issues an individual investor considers in its analysis, and in their outreach try to mitigate any concerns associated therewith. Demonstrating awareness of an investor’s priorities when communicating your story will show that you have done your homework and best position you to gain the investor’s support.