The Advisors' Blog

This blog features wisdom from respected compensation consultants and lawyers

August 3, 2022

BlackRock Outlines Reasons for Diminished Say-on-Pay Support

I blogged last week on about BlackRock Investment Stewardship’s annual stewardship report – which details its engagement & proxy voting stats and the rationale for voting decisions. On the one hand, the report had some good news for companies when it came to the asset manager’s view of corporate ESG progress. The picture wasn’t as rosy for executive compensation, though. At S&P 500 companies, BlackRock’s support for say-on-pay proposals has declined continuously over the past 5 years.

When it came to Americas-based compensation-related proposals (primarily say-on-pay & incentive plan proposals), BlackRock supported management 89% of the time – compared to 92% past year. For say-on-pay specifically, it supported 91% of management proposals this year compared to 94% last year – with the most significant decline happening at S&P 500 companies (BIS supported proposals at 87% of those companies this year, compared to 90% at the rest of the Russell 3000). It says that the main reasons for diminished support include cases of:

– Lack of clarity regarding the alignment of performance metrics and their weightings with company strategy;

– Concerns regarding performance goal rigor;

– Awards that were not aligned with sustained long-term performance; and

– Front-loaded awards without a compelling rationale for long-term shareholders.

The report provides case studies of say-on-pay “no” votes on page 42 and a success story on page 43. BlackRock also voted against 382 directors in the Americas to signal compensation-related concerns.

We’re continuing to post say-on-pay trend reports in our “Say-on-Pay” Practice Area. In addition, we’ll be covering the trend of declining support – including what it means for your directors and what to do now to shore up strong approvals – at our “Proxy Disclosure & 19th Annual Executive Compensation Conferences” – coming up in two months. Check out the agendas – 18 fast-moving, practical sessions held virtually over 3 days – October 12th – 14th. Sign up online, email, or call 1-800-737-1271. You can also add on our “1st Annual Practical ESG Conference” for a bundled discount! Tell your colleagues, and save even more for multi-seat registrations…

Liz Dunshee