US remuneration committee chairs get less support after losing say on pay votes, study finds

Executive pay firm, Semler Brossey, has analysed the relationship between the shareholder support given in elections of remuneration committee members and chairs and the result of the say on pay votes at US company AGMs.

The study of director election results between 2014 and 2016 found that over 80% of director elections have received vote support above 95% and only 0.3% of elections have failed to receive majority support (107 out of 42,499 total elections). However, in the year following a failed say on pay vote, remuneration committee members and chairs receive 9% and 12% less support than non-members, respectively. All directors receive approximately 96% support in the year following a Say on Pay result above 70%, Semler Brossey found.

The firm said that its analysis showed a difference between large and small companies in remuneration committee member support in years following a failed say on pay vote. While directors at companies in the S&P 500 and Russell 3000 receive similar support in the same year of a failed say on pay vote, remuneration committee members and chairs at S&P 500 companies generally have more support the following year.

Semler Brossey suggested that S&P 500 companies could be better equipped to handle director-related governance issues in the year following failed say on pay votes. The firm believes larger companies may have more resources at their disposal to conduct shareholder outreach and address proxy advisor concerns, both of which may increase shareholder support for remuneration committee members.

Up to 1st June 2016 1,383 Russell 3000 companies have held say on pay votes and 93% have passed with above 70% support. Semler Brossey reported that 22 companies (1.6%) had failed say on pay votes. The firm reports that of the Russell 3000 companies with vote results in each year between 2011 and 2016 (1,075 companies), 9% have failed Say on Pay at least once and 28% have received vote support below 70% at least once.

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