In a recent poll conducted by global advisory firm Willis Towers Watson, the majority of U.S. publicly traded companies said they would not remain silent if given the opportunity by the Securities and Exchange Commission to respond to proxy advisor voting recommendations.
The poll was conducted in December 2019, a month after the SEC proposed amendments to its proxy solicitation rules to improve the accuracy and transparency of proxy voting advice, and reflects responses from compensation and human resource professionals at 105 publicly traded U.S. companies. Among the results, 83 percent of companies said they believe the regulations, if finalized, would cause proxy advisors to be more transparent.
“We expect companies will welcome the rule changes, if enacted, and take advantage of the opportunities to improve their communication with proxy advisory firms,” said Don Delves, North America head of executive compensation at Willis Towers Watson, in a press release announcing the findings. “These proposals are, above all, about greater transparency and clarity around pay issues and recommendations. They could go a long way toward eliminating errors and ultimately help shareholders make informed proxy voting decisions.”
Nearly half the respondents said they would provide feedback on if companies disagreed with proxy advisor testing methodology (46 percent) or received “against” voting recommendations (47 percent).
“These proposals are, above all, about greater transparency and clarity around pay issues and recommendations. They could go a long way toward eliminating errors and ultimately help shareholders make informed proxy voting decisions.”
Don Delves, North America Head of Executive Compensation, Willis Towers Watson
Greater emphasis on people issues
The poll also revealed companies and their compensation committees will be placing greater emphasis on people issues moving forward. More than nine in 10 respondents (92 percent) said managing human capital resources will be important to their success over the next three years, compared to 71 percent over the past three years, Willis Towers Watson explains.
The survey results indicated an increase to the number of respondents’ compensation committees overseeing fair pay and gender pay issues and being responsible for inclusion and diversity issues in the next three years than the current level. The report notes these findings come on the heels of an SEC proposal to expand Form 10-K disclosure of human capital measures to enhance shareholder understanding of their importance.
“The ongoing push to embrace inclusion and diversity initiatives and other critical human capital issues, such as fair and gender pay, is clearly having an impact at all levels of organizations, and this includes compensation committees,” Delves said. “While they historically oversee Total Rewards and succession planning programs, some will broaden their focus to include additional human capital elements of culture, reskilling and well-being—and their impact on organizational performance.”