Other investors, like BlackRock, disagree with not necessarily linking fury over pay practices with re-electing directors. When BlackRock votes against executive pay, it also prefers to oppose misaligned pay-for-performance arrangements by withholding votes for the members of the compensation committee of the company's board of directors, according to BlackRock's policy statement. “As a result, our say-on-pay vote is likely to correspond with our vote on the directors who are compensation committee members responsible for making compensation decisions,” it said.
At Hewlett-Packard Co., Beazer Homes USA Inc., Jacobs Engineering Group Inc. and Shuffle Master Inc. this proxy season, shareholders rejected the executive compensation in say-on-pay votes. By contrast, in 2010 three companies failed to get a majority support in advisory votes on executive compensation.
The HP vote March 23 was 51.3% against the executive compensation. Lawrence T. Babbio Jr., HP director and chairman of its compensation committee, received the highest shareholder opposition vote among HP directors at 39%. Other members of the board received favorable votes at least close to the 80% level.
But at Beazer, Jacobs and Shuffle Master, there were relatively few votes against directors. “That would indicate most investors are using say on pay as their exclusive avenue indicting their displeasure with pay, rather than doubling up and voting against members of the board,” Mr. McGurn said. If shareholders' pay concerns aren't addressed, he added maybe next year “investors will consider voting against members of the compensation committee.”
This proxy season overall, shareholder proposals of all types, including those withdrawn, likely will be fewer than 1,000 for the first time since about 2003, Mr. McGurn said. They numbered about 700 as of late March.
Social proposals, including environmental, employment and political contribution issues, almost outpace governance proposals, including compensation, board and CEO issues, with some 330 to 370. Typically in a proxy season shareholder governance proposals outnumber shareholder social proposals by 2-to-1.
The shift has largely to do with the disappearance of shareholder proposals, calling for companies to conduct say-on-pay votes, because of the Dodd Frank voting requirement.
The largest number of shareholder proposals concerns the disclosure of corporate political contributions, at 77. None had been voted on as of March 28. Last year, shareholders introduced 56 such proposals; the average vote in support was 25%.
Sixty-four proposals call for a majority vote to elect directors. At Apple Inc. and Patriot Scientific Corp. shareholders voted 73.6% and 80.6%, respectively, in favor, while at Selectica Inc., they voted 80% in favor.
Some 70% of companies in the Standard & Poor's 500 had majority-voting provisions as of last June, according to recent ISS Governance data. That number is up from 59% the previous June. Among S&P 1500 companies, which includes those in the S&P 500, 36% had majority voting, up from 31% the previous year.
Shareholders have introduced 63 proposals on compensation issues, compared with last year's 175, including 77 say-on-pay resolutions.
Only two of the compensation proposals have gone to a vote, at Navistar International Corp. and Walgreen Co., producing 31.7% and 42.6%, respectively, in support.