The Advisors' Blog

– Liz Dunshee

Two investor giants just released their annual stewardship reports, which give some trend insights on their pay-related votes & engagements. According to Vanguard’s report, they voted against 585 compensation committee members last year for failing to act in response to shareholder feedback. That feedback comes in large part from prior-year votes – but Vanguard also says it’s still discussing compensation in 45% of its engagements. See page 25 of the report for a few case studies that show what that engagement looks like.

Executive pay is continuing to get attention at BlackRock too – its report makes a big deal of the fact that say-on-pay support has jumped significantly at companies where it’s engaged on the topic of executive compensation.

But as they say in “South Park,” it’s not all “sunshine & sparkles” – page 15 says that BlackRock voted against 24% of small cap equity plans (compared to 7% of Russell 3000 plans). Companies that fared poorly had evergreen & repricing provisions, unreasonable dilution, excessive one-off grants or lacked thorough disclosure about performance metrics. According to BlackRock, small companies need to step up their game on both governance & compensation policies to meet market best practices.