“This report will help both active investors and companies to understand which executive pay practices are viewed as detrimental to long-term shareowner value,” said Ferracone. “Keeping a hefty portion of target pay performance-based is key to receiving a positive vote.”
Ann Yerger, Executive Director of the Council of Institutional Investors said, “Boards at companies where say on pay proposals garnered significant opposition should be reaching out to their investors to discuss their concerns. They should also review their pay practices and consider appropriate changes.”
Key findings include:
• Investors voted against executive compensation for four primary reasons: pay for performance disconnect (92%); poor pay practices (57%); poor disclosure (35%); and unreasonably or inappropriately high compensation (16%).
• Investors evaluated performance and pay over multiple years, looking primarily at total absolute shareholder return (TSR) over one-, three- and five-year periods.
• Investors focused their time on in-depth analysis of pay at “outlier” companies, those with the largest disconnect between pay and performance.
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