The Advisors' Blog

The enthusiasm of 3 million pandemic-era retail holders was not enough for AMC to win say-on-pay support at this year’s annual meeting. The company’s Form 8-K reports that the advisory vote received support from 36% of holders present & entitled to vote at the meeting.

That abysmal showing was down from a lukewarm 60% in favor last year. Bloomberg reported that a lack of disclosure & actions around “responsiveness” to last year’s vote led both ISS & Glass Lewis to recommend against this year’s resolution. The proxy statement suggests that AMC was putting most of its “responsiveness” eggs in the retail basket, with this disclosure about “Consideration of Say-on-Pay Results”:

Over the course of the year we have worked to increase engagement with our stockholders including through the AMC Investor Connect initiative focused on our large base of retail investors and the inclusion of stockholder questions in our quarterly earnings calls. We have considered last year’s voting result and our compensation policies and decisions continue to be focused on financial performance and aligning the interests of executives with the interests of stockholders.

ISS also recommended against the Silverback himself, AMC CEO Adam Aron, who last year at this time was being hailed as “the CEO for the meme-stock generation” as he catered to the whims of retail holders who at that time made up 80% of the company’s shareholder base. He was re-elected this year with the support of about 86% of voting shareholders (although AMC uses a plurality standard for its classified director elections, so it was very unlikely he would have been voted out).

It’s always important to keep close tabs on changes to the shareholder base, and it’s not clear whether AMC’s retail base diminished since last year. It may have, since the proxy says that BlackRock & Vanguard now collectively own about 17% of outstanding shares. But one thing is apparent: investors are reluctant to support a $19 million compensation package when the stock has dropped nearly 60% since January. Free popcorn and a pantsless interview are unique (and in some ways successful?) engagement efforts, but they don’t deliver votes for pay.

It will be interesting to see whether the board reforms pay this year in response to the vote. Director support will be on the line. The company’s classified board structure and plurality voting standard offer protection against a control contest, but an activist could still take aim with other takeover tools.

– Liz Dunshee