When the Securities and Exchange Commission finalized a proposal giving shareholders advisory votes on executive compensation, corporate governance analysts didn’t think it was a big deal. The companies with executive compensation problems had already dealt with “say-on-pay” votes through the proxy-resolution process, they reasoned. They were wrong.
This proxy season, five companies have already lost advisory votes on executive compensation: Ameron, Beazer Homes, Shuffle Master, Jacobs Engineering, and Hewlett-Packard. And more defeats are likely still to come. “In the U.S., we’ve already had more negative votes in one year than any of the foreign countries that have say-on-pay have had,” says Ronald Mueller, a partner at the law firm Gibson, Dunn & Crutcher. In Britain and some of the European countries, perhaps one or two companies a year lose the vote, he says.
