January 27, 2020
Engagement Disclosure Following Low Say-on-Pay Result
– Lynn Jokela
A recent Georgeson blog sheds light on disclosure of investor engagement practices after a company failed or received a “red zone” say-on-pay vote result. Georgeson’s review included analysis of 2019 proxy statement disclosures for S&P 500 companies that received less than 80% support for their say-on-pay proposals in 2018.
The blog says there were 43 companies that fell into the fail or “red zone” bucket. Some of the findings for these 43 companies include:
– 80% disclose some information around investor outreach and/or attendees included in the outreach
– 72% disclosed director involvement in the engagement process
– 61% included charts or tables showing what they heard during engagement and actions taken in response
– Only 5 of the companies disclosed that they engaged with ISS and/or Glass Lewis and 4 of the 5 received less than 70% support for their 2018 say-on-pay proposal
The report also discusses engagement by the “Big 3” investors, BlackRock, Vanguard and State Street and shows how many of the 43 companies included in the review engaged with each of the Big 3. Some data points here include:
– Only 2 of the 43 companies didn’t engage with any of the Big 3
– 44% of the 43 companies engaged with each of the Big 3
The blog also provides reference to sample ways companies have spruced up shareholder engagement disclosure after receiving a low say-on-pay result.