June 20, 2023
Say-on-Pay Impact on Director Elections
In its latest report on say-on-pay, Semler Brossy’s findings are consistent with studies we’ve previously blogged about — that say-on-pay outcomes in 2023 so far have improved from 2022 — but the report also quantifies the impact of a low say-on-pay vote on director elections in recent years:
Over the past five years, average Director election vote support at companies that received a Say on Pay vote below 50% in the prior year is five percentage points lower than at companies that received above 70% support
A helpful chart in the report shows average director election results stepping down a few percentage points in the year following a say-on-pay vote of 50-70% and below 50%. As Liz recently reminded us, if you receive less than 70% support (ISS) or 80% support (Glass Lewis), both proxy advisors have expectations for engagement and responsiveness and will recommend against the reelection of compensation committee members or the entire board in subsequent years when companies fail to demonstrate that responsiveness.
For more on say-on-pay, join us Tuesday, June 27th, at 2 pm Eastern for our “Proxy Season Post-Mortem: The Latest Compensation Disclosures” webcast to hear from Compensia’s Mark Borges, Morrison Foerster’s Dave Lynn and Gibson Dunn’s Ron Mueller.
– Meredith Ervine