As proxy season 2016 begins in earnest, compensation is again the topic everyone is talking about. Despite years of practice since Say on Pay votes were our feature article this month highlights an alarming fact—the biggest investors are becoming less likely to support executive compensation packages, not more.
Bad news has been rolling in pretty regularly this year. First BP failed to pass its remuneration report after an astonishing 60% of investors voted against it. On the same day, Smith & Nephew also failed to pass its remuneration report, with 53% of investors voting against.
Since then there has been a number of other meetings with very contentious votes on compensation. Weir Group failed its binding remuneration policy with 72% of investors voting against, Shire only just passed its remuneration report as 50.55% of investors voted in favor of the proposal and Anglo American faced significant opposition to its remuneration report with 42% voting against.
So if you want to know which investors to watch this year look no further than this month’s main article. We have conducted an analysis of compensation which includes a comparison of US and UK voting for the ten largest investors on compensation. We have also looked at the ten investors who vote most aggressively on compensation in the US and UK, so you know who is hardest to please.
‘’Weir Group failed its binding remuneration policy with 72% of “ investors voting against.”
There is also an analysis of investors rationale for voting on compensation and quotes from industry experts on why investors have started voting more aggressively and ways to avoid the embarrassment of a negative vote on pay.
Obviously, compensation will likely remain a thorny issue for investors in years to come. Yet as long as companies remain responsive to the expectations of investors and learn from the mistakes of their predecessors hopefully they can avoid having to face an investor revolt on say on pay. The interview this month is a man many know by reputation, James McRitchie, publisher of CorpGov.net. We discuss with him a range of topics including why he is such a prolific proponent of shareholder resolutions and advocate of corporate governance, as well as why he wants to see more funds announce their votes in advance.
His hope is that “companies will realize they perform better if investors bring their brains to work as owners.” We also talk about the next step for proxy access. As Jim says, “Companies have adopted a version that limits groups to 20 shareholders, which is only going to happen if the likes of BlackRock, Vanguard and State Street join together to make nominations.” It seems there is consensus from proxy access proponents CalPERS and the New York City
Pension Funds on this, as both have announced this month that they are putting forward new proxy access proposals and are looking to improve existing ones. With 80 million votes now represented, Proxy Insight is the only tool to offer the voting intelligence necessary to navigate today’s investor relations market. If you are not a client and would like to take a look, we would be delighted to offer you a trial.
Click here for document: Proxy Monthly May 2016
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