Shareholders continue to express dissatisfaction with compensation decisions during the pandemic, along with environmental and social concerns. Numerous high-profile companies have seen say-on-pay proposals fail to win majority support (or pass by razor thin margins). Further, the largest institutional investors, including BlackRock and Vanguard, are voting in favor of shareholder proposals in record numbers, especially related to climate. For example, BlackRock
highlights that it has voted in favor of 75% of environmental and social proposals, globally, in the first quarter.
Voting trends for the S&P 500 say-on-pay proposals break down as follows:
- 291 companies received more than 80% say-on-pay support
- 24 companies received between 50-80% support
- 14 companies failed to receive 50% support
XPO Logistics (not a S&P 500 constituent) and Norwegian Cruise Lines represent two notable failed say-on-pay votes. In XPO’s case, the Teamsters union conducted a public “vote no” campaign, while Norwegian suffered shareholder criticism of the board’s decision to issue retention awards to the CEO.
- XPO had to contend with both a union vote no campaign and shareholder concerns with several elements of the compensation program including the overall quantum of CEO pay. Specific concerns were noted with the long-term cash awards, which carried shorter performance periods and vesting requirements. Further concerns were noted with the decision to lower NEO performance targets, but not the award opportunity.
- Norwegian has been frequently highlighted in press articles about CEO compensation in response to COVID-19. That high profile element likely contributed to the vote result – only 16% of shares supported the say-on-pay proposal. The company was criticized for modifying annual performance goals without adjusting payouts, granting a discretionary cash bonus, changes to vesting performance-equity tranches (one tranche vested at maximum), and a retention grant of time-based RSUs.
