Shareholder ‘No’ Votes on Directors Rise
Equity holders also
appear to be increasingly dissatisfied with executive compensation
23, 2015 | CFO.com | US
Shareholder support for directors and say-on-pay proposals declined in
the second half of 2014, according to a new
report that shows 344
directors of U.S. public companies failed to win the support of at
least 70% of shares voted.
Broadridge Financial Solutions and PwC’s Center for Board Governance
found that 125 directors at 45 different companies fell short of
majority shareholder approval during the 2014 fall proxy
“mini-season,” up from 99 directors at 53 companies in 2013. The
survey analyzed data from 1,077 public company shareholder meetings
held between July 1, 2014, and Dec. 31, 2014.
“The 70% ‘support’ benchmark is important to many companies and proxy
advisors,” Chuck Callan, senior vice president of regulatory affairs
at Broadridge, said in a news release.
The data also indicated that low director support is a recurring
problem for some companies. One-third of the companies that had a
director fail to attain majority support in the 2013 mini-season also
had a director fail to obtain majority support in 2014, and 46
companies have now failed to surpass the 70% affirmative threshold for
two straight mini-seasons.
On “say-on-pay,” out of 471 companies that had a shareholder vote on
their executive compensation plans, 35 failed to attain majority
support while the average level of support for pay plans fell to 80% —
from 83% last mini-season.
Declines in “say-on- pay” support levels were pronounced at large-cap
companies. Whereas in the 2013 mini-season, only one large cap company
failed to achieve at least 70% support for say-on-pay, six (17%) fell
short of that threshold last year.
Thirty of the 35 companies that failed to win majority support for
their plan also had a director election this season. Almost half of
those firms had a director who failed to attain at least 70%
Required under Dodd-Frank, say-on-pay votes are nonbinding. However,
many companies revamp pay packages after shareholder votes show
displeasure with current compensation schemes.