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Early Returns on SOP Votes

04/27/2012 - FTI Consulting, Strategic Communications

We are still in the earliest stages of proxy voting results for 2012, but preliminary data from Proxy Monitor supports the findings of our research that shareholders would bring more scrutiny to say-on-pay voting this year. Based on the proxy voting results of 30 companies who have been through their shareholder votes, average shareholder support declined by over six points from 2011, to approximately 85% this year.

This alone does not seem like a major cause for concern, but consider that six of these companies (20% of the sample) received less than 70% of the vote for their compensation plans, including Citi, Disney, and Johnson Controls, who have all made headlines for their lack of shareholder support. Over half of the companies to report their proxy results so far have received lower shareholder support than a year ago.

Of course, it is still early, and given the dynamic nature of the proxy season, we expect companies having later annual meetings to learn from the experiences of the early movers and take actions to enhance results. While it is late in the game for companies to influence shareholder voting, the evidence thus far is that winning approval of compensation plans is going to be more difficult than last year, so companies that are concerned should reinvigorate their proactive engagement with shareholders.

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