December 4, 2023
Equity Plan Approvals: Showing Signs of Headwinds?
According to a recent 12-page recap from WTW, this year has been relatively quiet when it comes to say-on-pay failures, with only 49 this year, compared to 69 last year and 60 in 2021. However, votes on equity plans indicate eroding support on that front. Here’s an excerpt:
We have observed some headwinds for equity plan share requests. We have observed one failure within the S&P 1500, similar to last year at this time (two failures at this time in 2021); however, ISS opposition is the highest at 17% compared with 13% at this time in 2022 and 2021. Support is at 89% compared with 91% at this time in 2022 and 2021.
Companies should monitor their investors’ voting guideline updates and engage with stakeholders to address proactively any potential issues anticipated ahead of planned stock plan proposals. With talent pressures continuing, companies should manage share pools to avoid unexpected surprises and factor any potential headwinds into their incentive programs.
WTW notes that these challenges come at the same time that companies may be needing to use more of their share pool to attract talent. This off-season will be a good time to monitor investor sentiment on dilution and provisions that are considered “problematic.”
– Liz Dunshee