In the Russell 3000, 28 of the executive compensation plans put to a say-on-pay vote in the first half of 2017 failed to receive the support of most shareholders. However, only six of those 28 companies appeared on the same list in 2016.

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This finding teaches two lessons to corporations. First, they should not bask in the success of a prior vote: Circumstances may change rapidly, and those changed circumstances may affect the pay-for-performance alignment that is key to a successful say-on-pay vote; companies should recognize those changed circumstances and reflect them in their compensation plans or they may risk their vote the next time around. The second lesson is that there is a way out of a failed vote: the way out is through dialogue and engagement with all investors, especially those who did not support the compensation plan, to understand and ease their concern while making the necessary corrections. 

CEO and Executive Compensation Practices: 2017 Edition and the full Corporate Intelligence portfolio are complimentary to members of The Conference Board and The Conference Board Governance Center. A fee may apply to non-members. (To learn more about our member benefits, email us at membership@conferenceboard.org.)

The report is a collaboration among The Conference Board, Arthur J. Gallagher & Co. and MylogIQ.