In say-on-pay’s second year, recommendations from proxy advisors have grown in significance for public companies. This week’s Behind The Numbers, from Equilar takes a look at firms that faced daunting negative recommendations by proxy advisors in 2012 and examines what those companies did to defend their pay practices.
While ISS issued negative recommendations in nearly one out of five case, I recommended voting against even a higher proportion of such proposals.
I generally vote against pay packages where NEOs were paid above median in the previous year but I do make exceptions where something obviously warrants different treatment. According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay, Oxford Review of Economic Policy, Vol. 21, Issue 2, pp. 283-303, 2005), aggregate compensation by public companies to NEO increased from 5 percent in 1993-1995 to about 10 percent in 2001-2003. That’s an unsustainable shift of funds.