June 6, 2019
Say-on-Pay & Pay Ratio: This Year’s Results
– Liz Dunshee
As they do every year, Semler Brossy has been publishing regular updates on the voting results for say-on-pay, equity plans, director elections and other proposals – as well as this year’s pay ratio stats. We post these memos in our “Say-on-Pay” Practice Area. Their latest report shares these details:
– The current failure rate (1.9%) is 20 basis points lower than the failure rate at this time last year (2.1%)
– The 91.3% average vote result thus far in 2019 is 40 basis points higher than the average vote result at this time last year (90.9%)
– Nearly one-third of the S&P 500 has received vote support below 70% at least once since 2011
– 9% of the Russell 3000 and 7% of the S&P 500 constituents have failed Say on Pay at least once over the same period
– The average vote result for companies that received an ISS “Against” recommendation is 31% lower than for companies that received an ISS “For” recommendation
And when it comes to pay ratio, here’s how S&P 500 and Russell 3000 companies compare, based on nearly 2000 disclosures:
– The median CEO Pay Ratio of the S&P 500 is 2.1x the median CEO Pay Ratio of the Russell 3000, which is slightly lower than the 2.2x multiple we observed between the two indices at this time last year
– The range of median employee compensation for the S&P 500 is slightly higher than the Russell 3000, except at the 90thpercentile, where the Russell 3000 is 12% higher
– The Russell 3000 CEO Pay Ratio distribution trails off near the 300:1 while the S&P 500 distribution trails off near 500:1
– The distribution of CEO Pay Ratios is most highly concentrated near 60:1 for the Russell 3000 and near 120:1 for the S&P 500
– The median change in Pay Ratio by company in the Russell 3000 is +2% and in the S&P 500 is + 1%; the median change in Summary Compensation Table CEO pay by company in the Russell 3000 was +6% and in the S&P 500 was +4%