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Governance

Say-on-pay proposals getting strong support — Willis Towers Watson

Say-on-pay shareholder proposals are garnering 91% average support this proxy season, just above the 90% received last year, according to analysis from Willis Towers Watson.

Fifteen votes over say-on-pay proposals — 2% — have failed as of May 10, according to a WTW analysis released Tuesday of 724 Russell 3000 companies this year. In 2018, 56 proposals, or 3%, failed, WTW data show.

Say-on-pay proposals provide shareholders with a voice in executive compensation.

In taking a deeper look at unsuccessful proposals, James Kroll, Los Angeles-based director of WTW's governance advisory practice for executive compensation, said 80% fail at companies the first time. "If you've done well you can't rest on your laurels necessarily," Mr. Kroll said of companies heading into their annual meetings.

Mr. Kroll said the failed proposals tend to come at smaller companies that may not have the same level of dialogue with shareholders as larger companies. "The thing about that dialogue is that it can guide a company to pivot their disclosure to give more information that the investor needs to reach a favorable conclusion," he said. "That may not be happening in some of these companies that are failing for the first time. They may not be benefiting from that feedback."

Mr. Kroll would not mention any specific company results, but recent 8-K disclosures show failed say-on-pay proposals this year for the first time at software company PTC Inc. and energy company FuelCell Energy Inc. PTC's proposal garnered 42% support, while FuelCell earned 48%.

Proxy advisory firm Institutional Shareholder Services, Rockville, Md., has recommended negative votes on say-on-pay proposals 10% of the time as of May 10, down from 14% for the entire 2018 season, according to WTW data.

Mr. Kroll noted the numbers are subject to change as results from annual meetings in May and June are tabulated.