The Advisors' Blog

In early say-on-pay stats that I shared a few weeks ago, only a few companies have received an “against” recommendation from ISS so far this year. Despite that good news, a recent analysis from Exequity says that companies with summer meetings – specifically, those in June – shouldn’t get too comfortable. Here’s why:

In fact, as much as there is a seasonality to proxy filings and annual meetings, there seems to be seasonality to ISS recommendations. Exequity analyzed SOP voting results and ISS “Against” recommendations month by month from 2011 to 2024. The data indicates that companies with annual meetings in June are more likely to receive adverse recommendations from ISS than those holding meetings in other months.

Exequity found that last year, 43% of all adverse recommendations came in June! Here’s what the data showed from 2011 – 2024:

• The average annual rate of “Against” recommendations for January through May was 10% and July through December 13%.

• The average annual rate of “Against” recommendations in June was 18%.

• This trend holds on an annual basis despite the dates of annual meetings slowly shifting away from April and into June over the period measured (~14% of meetings in June 2011 versus 26% in June 2024).

Why do ISS “against” recommendations peak in June? Exequity ran the numbers to see if it could be explained by pay & performance disconnects, “repeat offenders,” or industry considerations. None of those possible explanations panned out. The low-hanging joke would be that maybe ISS is just tired and cranky by the time June rolls around. I know a few comp consultants and securities lawyers who could empathize with that! But – as explained in the chapter of our Disclosure Treatise on “Say-on-Pay Solicitation Strategies” – the proxy advisor does have quantitative & qualitative models that are intended to ensure that companies get consistent treatment, so I’d be careful in jumping to that conclusion.

That said, given the influence of ISS recommendations on say-on-pay outcomes, even an unexplained trend like the “June Phenomenon” deserves attention. You may get some weird looks if you suggest moving your annual meeting solely because of this. But hey, plenty of athletes do strange superstitious things on game day, so maybe it’s worth carrying that practice over to the annual meeting sphere (also remember to wear your lucky socks). Of course, rescheduling an annual meeting also isn’t a decision to make lightly! The (potential) benefits with ISS might be outweighed by the costs of disrupting everyone’s calendars, potential changes to deadlines, etc.

– Liz Dunshee