Shareholder support for exec comp falls

US shareholder support for executive compensation plans declined in 2014 at mid-cap, small-cap and micro-cap companies, according to the latest edition of ProxyPulse.

The publication, produced jointly by Broadridge Financial Solutions and PwC’s Centre for Board Governance, analysed 4,113 shareholder meetings held between 1 January and 30 June 2014 by US publicy-listed companies.

It found that while average support levels for executive compensation plans rose to 91 per cent from 89 per cent at large-cap companies, a greater percentage of mid-cap and small-cap companies failed to attain at least 50 per cent shareholder support.

Although shareholders continued to support “say-on-pay” proposals (where shareholders have the right to vote on the remuneration of executives), at the same high levels, on average, as they did in the 2013 season (89 per cent), the percentage of plans at mid-cap firms attaining support in the 90-100 per cent range fell from 72 per cent to 71 per cent and the percentage of plans that failed to attain majority support doubled from 3 per cent (18) to 6 per cent (41).

There was also some weakening in support among small-cap companies.. The percentage of plans attaining support in the 90 per cent range decreased from 73 per cent to 70 per cent, and the percentage of plans with support in the 50-69 per cent range increased from 6 per cent to 8 per cent.

Eight in 10 US directors surveyed said that “say-on-pay’ has caused their board to look at compensation disclosures in a different way and that there has been an increase in the influence of proxy advisory firms.

Nearly 75 per cent of directors believe “say-on-pay” has increased shareholder dialogue and prompted directors to change the way they communicate about compensation.

A full copy of the report can be downloaded here.