How Companies React to Say on Pay Failures

Say on Pay continues to exert significant influence on corporate governance, compelling companies to reassess and adjust their executive compensation practices in response to shareholder feedback. Analyzing 77 companies within the Russell 3000 facing failed Say on Pay votes, this Equilar study aims to dissect the myriad of changes implemented by these companies post-failure and […]

How Companies React to Say on Pay Failures
Posted by Lucia Song, Equilar, Inc., on Monday, July 22, 2024
Editor's Note:

Lucia Song is a Research Analyst at Equilar, Inc. This post is based on her Equilar memorandum.

Say on Pay continues to exert significant influence on corporate governance, compelling companies to reassess and adjust their executive compensation practices in response to shareholder feedback. Analyzing 77 companies within the Russell 3000 facing failed Say on Pay votes, this Equilar study aims to dissect the myriad of changes implemented by these companies post-failure and discern emerging trends in executive compensation governance. The study examines 2023 proxies following a failed Say on Pay vote, and analyzes common changes these companies made and the results in the next fiscal year following changes. A key finding is that implementing changes as post-failure mitigation can, in most cases, lead to positive effects on shareholder voting in the following year, but there are still circumstances where changes might not be effective.

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