The coming proxy season will center on the votes on companies’ executive compensation plans that were mandated by Dodd-Frank. The three years of say-on-pay votes to date have resulted in a significant increase in companies’ efforts to reach out to investors to assess their views—and, if possible, influence their votes.
Compensation “tends to be a hot-button issue for management,” said Laura Richman, of counsel in the Chicago office of law firm Mayer Brown. “So just the existence of this advisory vote has increased shareholder engagement.”
While proxy proposals related to compensation slowed in the first two years of say-on-pay votes, they picked up last year, said Kumar, who's pictured at left. The two most popular were a measure that would prohibit accelerated vesting of options and another aimed at encouraging executive stock retention. “Those two accounted for almost 75 percent of compensation-related shareholder proposals last year,” he said. “We should see the same compensation-related proposals show up again.”