As has been the case in prior years, most companies had successful say-on-pay votes in 2018.According to the Semler Brossy report, through early July 2018, only 2.6 percent of Russell 3000 companies failed their say-on-pay votes during the 2018 proxy season. Companies are allowed to identify the median employee based on any consistently applied compensation measure, such as compensation amounts reported in their tax and/or payroll records.
For example, Black Rock has publicly stated that it expects to see at least two women directors on every board, indicating that it may vote against nominating/governance committee members if it believes that a company has not accounted for diversity in its board composition.
State Street Global Advisors (SSGA) advised that it will vote against the chair of the nominating and/or governance committee or board leader of companies that fail to take action to increase the number of women on their board of directors and reported that by early March 2018 it had voted against more than 500 companies for failure to demonstrate progress on board diversity.
Advance planning greatly contributes to a successful proxy season, culminating with the annual meeting of shareholders.
It is already that time of year when public companies should be thinking about the 2019 proxy and annual reporting season.
The average support for say-on-pay during this period was 90.4 percent, with 76 percent receiving support above 90 percent.
Proxy advisory firms such as Institutional Shareholder Services (ISS) have become very influential in the say-on-pay process As a result, if a company receives a negative proxy voting recommendation from a proxy advisory firm, it often (but not always) prepares additional material in support of its executive compensation program.
Of course, constituencies in addition to investors are interested in pay ratio disclosures, including a company’s employees.
Some consumers, governmental authorities, politicians and media outlets are also paying attention to pay ratio disclosures.
Companies are allowed to provide supplemental pay ratio disclosures, but they are not required to do so and most companies have opted to provide just the mandated disclosure in their 2018 proxy statements.