March 2, 2022
Say-on-Pay: Investors Still Don’t Like Replacement Awards
I blogged yesterday about the “against” recommendation that ISS is making for Apple’s say-on-pay resolution. While you don’t have to be making $82 million grants to get dinged for a lack of performance criteria or disclosure, mega grants do tend to draw extra scrutiny.
Problematic pay practices that lead to low say-on-pay support are also “blood in the water” for activists. GE received this letter from SOC Investment Group (formerly CtW) urging a refreshment of the company’s compensation committee in light of their 2020 decision to lower performance hurdles associated with a previously granted award, which they did by granting a replacement award that year (valued at $60 million at target). The letter reiterates concern that the activist expressed last year, which preceded a failed say-on-pay vote and several committee members receiving less than 80% support in the director election. Now, SOC says that the company hasn’t demonstrated responsiveness.
If you’re looking to overcome a low say-on-pay vote, make sure to revisit the transcript from our December webcast – “Compensation Committee Responsiveness: How to Regain High Say-on-Pay Support.”
– Liz Dunshee