Are Top Investors
Listening to Proxy Advisors on Pay?
Posted by Seth Duppstadt, Proxy Insight,
on Thursday, February 2, 2017
Editor’s Note: Seth Duppstadt is Senior Vice
President at Proxy Insight. This post is based on a Proxy Insight
publication authored by Mr. Duppstadt.
investors are not following the recommendations on executive compensation set
out by Proxy Voting Advisers (“PVA”), a study by data company Proxy Insight has
Proxy Insight analyzed voting on Advisory
Say on Pay (“SoP”) resolutions in the US and UK in 2015 and 2016 for
10 of the largest institutional investors and compared each vote to
the recommendations from ISS and Glass Lewis. While voting by top
investors correlated with ISS 90% of the time and Glass Lewis 83% of
the time for all SoP resolutions, the link is drastically reduced for
votes where ISS and/or Glass Lewis recommend against a SoP proposal.
aggregate, the 10 investors matched ISS on only 51.4% of recommendations to vote
against management on SoP in 2016, and 29.5% of Glass Lewis’. In each case, the
level of opposition was sharply reduced compared to the year before.
picture is even more noteworthy when both ISS and Glass Lewis recommended
voting Against management. Since 2015, the top investors only voted Against
61.8% of SoP resolutions where both ISS and Glass Lewis recommended against.
Commenting on the analysis, Proxy Insight Managing Director, Nick Dawson
remarked: “Not only does the data provide a more realistic measure of the
influence of Proxy Advisors, which is often overblown, but it also suggests
increasing reluctance from investors to oppose management on the perennial issue
breakdown for the 10 investors is as follows:
Harvard Law School Forum
on Corporate Governance and Financial Regulation
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