New Tools to Track Proxy Season Voting

As Proxy Season 2025 gets into full swing, Farient Advisors will soon launch a redesigned Say on Pay Tracker™ in the US and debut the first Remuneration Policy and Remuneration Report Tracker in the UK. Both Trackers will feature filters that allow visitors to slice and dice data by index, segment, size, and year. The sites will also host alphabetical tables by company name that show the sector, annual meeting date, and voting percentage.

As of March 10, 2025, 75 US-listed companies had completed annual meetings this proxy season. Most of their voting percentages were greater than 80 percent, with just four companies receiving a less than 80 percent voting percentage.

What is the significance and impact of Say on Pay votes, particularly in the US, where the votes are nonbinding and only a small percentage of companies receive less than 50 percent approval? Last year, for example, only one percent of S&P 500 companies failed their votes as investors evaluated pay outcomes in relatively strong stock and labor markets. Yet, a poor vote draws attention to the company, management, and the board. Ignoring the message delivered by a failed vote can lead to continued shareholder dissatisfaction, possible vote “no” campaigns against directors, or even legal action, albeit that is rare.

 

Farient’s View

After a poor vote, companies should actively engage with shareholders to address their concerns and clarify the board’s pay practices. This proactive approach helps prevent further conflict and ensures compensation programs meet shareholder expectations. How should companies and their boards respond to shareholders who express concerns or vote against the pay plan?

 1. Determine the reasons behind dissenting votes:

• Identify “red flags”: Boards should look for issues that may have triggered dissenting votes. These could include excessive one-time special awards, a lack of performance-based awards that fail to align pay with company performance, insufficient disclosure of pay practices, or a failure to address prior shareholder concerns.
• Assess the effectiveness of the Compensation Discussion and Analysis (CD&A): Boards must evaluate whether the CD&A effectively demonstrates a pay-for-performance relationship. If the CD&A fails to show alignment between executive compensation and company performance, it may contribute to shareholder dissatisfaction.
• Consider negative comments and recommendations from Institutional Shareholder Services (ISS) and Glass Lewis: Boards should review any negative feedback or recommendations from proxy advisory firms like ISS and Glass Lewis. These firms often influence shareholder voting decisions, and their critiques can highlight areas for improvement.
• Evaluate general investor concerns: Boards should also consider broader investor concerns about the company. These could include overall company performance, governance practices, or strategic direction issues.

2. Identify and meet one-on-one with large shareholders who cast dissenting votes: Boards should proactively reach out to significant shareholders who voted against the pay plan. By engaging in one-on-one discussions, boards can better understand the shareholders’ specific concerns and issues. This direct communication can help build trust and find common ground.

3. Improve CD&A disclosures by highlighting pay-for-performance alignment: Boards should enhance the CD&A to highlight how executive compensation aligns with company performance. This includes providing detailed explanations and data demonstrating the link between pay and performance. Improved transparency can help address shareholder concerns and improve future voting outcomes.

See related stories:

• Navigating Uncertainty as Proxy Season Unfolds
• What Happens When Proxy Advisors Say No to Executive Compensation?