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Volume 9, Number 4
• April 2012 |
Research
Directors & Boards 2012 Proxy Survey
This
Directors & Boards
survey was conducted in February 2012 via the web, with an email invitation
to participate. The invitation was emailed to the recipients of
Directors & Boards’
monthly e-Briefing. A total of 248 usable surveys were completed. Complete
results are available in the Q1 2012 edition of the magazine.
Current and impending rules will continue to dominate this year’s proxy high
season, but perhaps because share prices are up and the markets are nearing
or exceeding 2008 highs, companies are having success with their
shareholders in implementing say on pay and say on frequency.
According to Directors & Boards'
recent proxy expectations survey, of the 59% of respondents who said they
had a Say on Pay vote in 2011, the vast majority (82.7%) saw approval votes
of 80 percent or greater of shareholders. Say on Frequency of those votes
was also on the top of the shareholder agenda last year.
Even with the strong passage of most Say on Pay votes, directors noted a
variety of board responses to last year’s votes, including:
“We engaged compensation consultants, amended the CEO’s employment
agreement, and adopted more pay-for-performance compensation” and “We have
heightened our communication with shareholders on pay packages.”
Nearly 11% of respondents reported that their proposed slate of directors
wasn’t re-elected in its entirety last year, with a similar number reporting
that the entirety of the company’s shareholder proposals were also not
okayed.
For 2012, Say on Pay and Say on Frequency will continue to be a driver of
proxy initiatives, according to our respondents, but there is an expectation
to see more measures related to political contributions and environmental
and social issues. “We’re seeing vastly more labor influence,” one director
noted. “ There are a lot of proposals regarding political (and other)
contributions, including to non-profits (the Planned Parenthood effect).
We’re also seeing a lot more pressure on legislatures to reverse Citizens
United.”
The majority of respondents (81%) that their compensation plans don’t have
red-flag elements like excise tax gross-ups, high levels of executive perks,
perk gross-ups or single-trigger change of control provisions. That, the
recovery of shareholder value through stock price gains, and the halo-effect
of the Occupy Movement and this year’s political battles, may explain the
increased expected proxy focus on non-pay issues.
Interestingly, nearly 27% of respondents indicated that they’ve begun to
implement pending Dodd-Frank rules in advance of final rulemaking, with one
director noting that “we are committed to best practices on our board, and
want to be at the forefront of complying with Dodd-Frank.” The majority of
respondents, however, are waiting for final rules before moving forward. “We
don’t want to implement twice,” another director said.
And 56.3% of respondents note that their companies are more engaged in
direct communication with institutional and large shareholders than they
were three years ago, and nearly 39% indicate that their boards are engaged
in direct communications with their largest shareholders. At the annual
meeting, only 7.5% of respondents report that there are no opportunities for
shareholders to address or interact with directors.
Copyright © 2012 Directors
& Boards |