The Advisors' Blog

Many companies experienced a bumpy ride on their “say-on-pay” votes last year. What should companies expect this year?  This CAPIntel article says that this year may present some challenges as well:

In 2023, Say on Pay results are likely to be shaped by the unique sociopolitical and economic environment companies face today, the impacts of which have not been felt equally across industries. Amid the threat of recession and a tight labor market, many companies felt obligated to take special actions during 2022 for retention purposes, as stock price declines due in part to the Fed’s anti-inflationary measures negatively impacted executives’ equity holdings. Shareholders and proxy advisors may not view such actions as favorably as in previous years if paired with dramatic drops in stock price, especially towards year-end, given the potential for misalignments in pay-for-performance.

Similarly, some companies may trigger pay-for-performance concerns in cases where above-target bonus payouts based on strong financial metric performance for most of 2022 are coupled with year-end share price decreases. Companies in hard-hit industries, such as technology and financial services, may also draw increased scrutiny from the proxy advisors over their efforts to reign in COVID-era overexpansion with sweeping layoffs. However, as in previous years, we expect pay-for-performance misalignment to continue to be the main driver for ‘Against’ recommendations from proxy advisors in the broader market.

– John Jenkins