While early filing companies held annual meetings that reflected the initial impacts of COVID-19, current meetings are the first to show longer term and ongoing impacts. So far, of the 15 S&P 500 companies that have held meetings:
- 12 have received more than 80% say-on-pay support
- 2 received between 50-80%
- 1 failed to receive 50% support (see below)
Walgreens Boots Alliance (
WBA) failed its Say on Pay vote for 2021 at 47%, following an 83% vote last year (which was significantly below the company’s previous average of 92%).
- Concerns regarding TSR performance carried over from 2020 and were compounded by adjustments to the long-term incentives.
- While adjustments to the annual incentive resulted in below target payout levels, the majority of the concern was focused on the long-term incentive. The adjustments were made in the final year of the performance period and raised the payout level from no payout to above target.
Overall, the concern with the Walgreens say-on-pay proposal reflects trends we saw for votes in the last half of 2020. Namely, if TSR appears in-line with peers and modifications do not drive payouts above target, shareholders are likely to accept some flexibility. Despite shocks to the system, ultimately the
vote results for 2020 were in line with 2019 vote results – but it is important to remember that the majority of companies with annual meetings in the first half of 2020 did not reflect the impact of the crisis in their proxy statements.
The other, unspoken element in this situation will be proxy advisory vote recommendations, primarily from ISS. During the heat of proxy season, companies may well see harsher vote recommendations following finalization of their policy process. Further,
ISS canceled its policy of providing draft proxy reports to S&P 500 companies and we anticipate an increased error rate in final reports due to this change. If you experience errors in your final proxy report due to not receiving a draft, please reach out to Andrew Maletz at
amaletz@execcomp.org.
