The Advisors' Blog

Even BlackRock isn’t immune to low say-on-pay. According to Reuters, BlackRock narrowly avoided a true say-on-pay failure with only 58% of votes cast supporting the advisory proposal at its annual meeting. Reuters previously reported that ISS and Glass Lewis had recommended against say-on-pay at the company. ISS took issue with “the process used to determine annual cash incentive awards,” and Glass Lewis cited “the structure of the sizable retention awards granted to a handful of executive officers during the year.”

BlackRock’s statement in the article that it “looks forward to engaging with shareholders” tees up a helpful reminder for this time of year. While proxies typically cite a majority of the votes cast standard under state law, there are serious implications to receiving a say-on-pay vote significantly under the close-to-90% norm. Specifically, receiving less than 80% support triggers certain engagement expectations for Glass Lewis and receiving less than 70% support triggers similar expectations for ISS. Failure to engage with shareholders and show responsiveness can result in the proxy advisors recommending against the reelection of compensation committee members or the entire board in subsequent years.

Say-on-pay votes seem to be continuing last year’s upward trend this year, but if you find yourself in this unenviable situation, check out the “Say-on-Pay Solicitation Strategies” chapter of Lynn & Borges’ Executive Compensation Disclosure Treatise.

– Meredith Ervine