Proxy advisory firm Institutional Shareholder Services said companies received improved overall endorsement on their executive compensation program, with 91.2 percent gaining an average approval rate this year compared to 89.2 percent last year. In its preliminary findings, ISS attributed the improvement to greater engagement by companies in explaining to shareholders their pay practices in supplemental proxy materials. Although the average chief executive’s compensation at S&P 500 firms increased by over 33 percent from prior year, it received few opposition from shareholders due to greater engagement by companies. S&P 500 firms received 88.6 percent support, while Russell 3000 companies gained 91.8 percent approval on their say-on-pay votes.
The last proxy season saw fewer governance proposals filed by investors. A total of 466 governance proposals were filed this year compared to 615 in 2010. “The main reason for this drop was the absence of shareholder “say-on-pay” proposals, which became unnecessary after the passage of the Dodd-Frank Act,” the firm said in the report. 259 of the total governance proposals filed this year went to a vote, 104 were omitted, and 103 were withdrawn. Companies were able to exclude some of the proposals by offering their own management proposals or taking board action. However, ISS noted companies did not go as far as what investors wanted.
