Companies Ignore 'Say on Pay' Votes

Shareholder support for the advisory vote on executive compensation--commonly known as "Say on Pay"--is growing. The median shareholder votes for say-on-pay proposals rose to 42 percent in 2008 from 41 percent in 2007, based on the 76 proposals that have come to a vote so far this year.

So far, say-on-pay proposals received majority support at a total of 15 companies in 2007 and 2008. But not all of those companies are rushing to put the advisory vote in place. In fact, only five of those companies, or roughly two-thirds, have adopted the vote.

While shareholder support for say on pay is growing overall, support decreased at 17 companies. Somewhat surprisingly, eight of these companies were in the financial sector, including companies such as Citigroup, Wachovia, Merrill Lynch and Wells Fargo. At the same time, these companies have new CEOs, and CEO compensation has typically decreased, sometimes significantly.

“It is possible that these facts have played a role in the decreased shareholder support for say on pay at these financial institutions,” commented Research Associate Damion Rallis, author of the report.

The findings are published in a commentary titled Say on Pay 2008, available in The Corporate Library’s online store.