As the 2013 proxy season marches on, just a handful of public companies haven’t passed their say-on-pay votes, while shareholders have pushed a number of their own proposals on corporate pay practices, according to tabulations in a new report by The Conference Board and FactSet Research Systems.
The latest installment of "Proxy Voting Fact Sheet" tallies the results of annual general meetings held Jan. 1 through April 30, at 610 companies in the Russell 3000 index.
Among those companies, 502 reported detailed results of the say-on-pay vote that allows shareholders to voice their approval (or disapproval) of management’s executive compensation plan: 496 companies passed, and six failed to capture majority support.
Those that failed the nonbinding vote included Biglari Holdings Inc., with 33.8 percent for votes and 45.8 percent against; Cogent Communications Group Inc., with 39.3 percent for and 59.7 percent against; and Dendreon Corp. with 31 percent for and 67.8 percent against.
Previously, the Conference Board also reported failed say-on-pay votes at Digital Generation Inc., Navistar International Corp., and Nuance Communications.
Overall, companies averaged support levels of 91 percent for their comp plans through April. However, 27 companies emerged from their meetings with less than 70 percent support for their pay plans, "the level at which proxy advisory firms may place greater scrutiny on companies," the report notes.
Some of the latest companies to pass with less than 70 percent approval include U.S. Steel Corp.(63.6 percent support), eBay (59.7 percent support), and Janus Capital Group (61 percent support), joining Tyco, Apple, and The Walt Disney Co.from earlier in the 2013 season.
An added twist this proxy season is the extent to which shareholders are putting forth their own compensation-related proposals. Through April, they submitted 46 proposals on the topic, 19 of which were put to a vote, drawing 28.6 percent average support.
The volume of proposals is surprising, says John Laide, vice president with FactSet Research Systems, given that the say-on-pay votes — which became mandatory for companies in 2011 — already serve as "a forum if you don’t like a company’s pay practices."
"We didn’t expect compensation to continue to get this amount of proposals," he says.
According to the report, the largest number of shareholder proposals on comp issues that went to a vote had to do with requiring an equity retention period.
"Proposals asking the board to adopt a policy requiring executives or directors to retain a specified amount of equity for a certain period were the most frequently voted executive compensation proposal during the period (10). Overall support for those proposals was low, on average 25.9 percent."
And as the Securities and Exchange Commission considers whether or not to propose a rule on political spending disclosure by companies, shareholders have continued to push the issue at annual meetings. Among shareholder proposals on social and environmental policy, "the highest volume of proposals related to political issues (24)," the report says. "None of those proposals received majority support and overall support was low, at 18.3 percent (as a percentage of votes cast)."