THE WALL STREET JOURNAL.
2013, 1:45 PM ET
Puts Directors at More Risk
Corporate directors generally receive overwhelming investor support, but not
as much when their companies’ pay practices raise eyebrows, according to
research from proxy processor
Broadridge Financial Solutions Inc.
than 90% of directors at companies with market capitalizations above $2
billion garnered more than 90% of voted shares in favor of their election,
according to Broadridge’s first
ProxyPulse report, prepared jointly with the PwC’s Center for Board
Governance and released last week. The report studied shareholder voting
trends from the beginning of the year to late April, representing about 11%
of the total number of meetings slated for this proxy season.
Support was less overwhelming for directors at companies with market caps of
$2 billion or less, the report found, with just 76% of directors receiving
more than 90% approval of voted shares.
when it came to so-called say-on-pay votes, which allow holders an advisory
vote on corporate compensation practices, investors showed less love. About
13% of companies that held their votes during the period studied didn’t
receive even 70% approval for their pay packages. According to Broadridge
and PwC, proxy advisory firms “more closely scrutinize” compensation plans
that fail to achieve 70% support.
Broadridge drilled deeper into the numbers for CFO Journal and found that
support for both directors and compensation was slightly lower this year.
However, the results through late April are only a small sample, so this gap
may narrow or be erased as proxy season progresses, cautioned Chuck Callan,
senior vice president of regulatory affairs for Broadridge.
said, Broadridge said there is a “direct correlation between negative
sentiment on pay plans and negative sentiment toward directors.”
the 16 companies Broadridge identified that failed to receive a majority in
its say-on-pay vote, or 6.3% of 253 votes, five of them saw a total of 23
directors fail to gain a majority of favorable votes. And of 12 companies to
have one or more directors fail to receive a majority, or 2.7% out of 446
holding director votes, five of them also failed their say-on-pay vote.
all of last year, 97 out of 2,312 firms that voted on say-on-pay, or 4.2%,
failed, while 88 of 4,211 companies with director votes, or 2.1% of the
total, had one or more directors who didn’t receive a majority of votes in
favor of their election.
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