Investors and companies disagree on how boards should react to say-on-pay dissent, according to the results of ISS’ annual policy survey.
The study, which asks investors and issuers for feedback on governance issues to help ISS in its policy formation process for the coming proxy season, indicates executive compensation will be a flash point once again during next year’s round of annual meetings.
Survey participants were asked at what level opposition to a say-on-pay proposal should trigger an explicit response from the board regarding improvements to pay practices.
Of the US respondents, investors most commonly cited ‘more than 20 per cent’ as the level at which a response should be forthcoming (36 per cent picked this option).
US corporations, on the other hand, selected ‘more than 50 per cent’ as their preference for when the board should issue a response (48 per cent picked this option).
Looking at the results on a cumulative basis, however, there is broad agreement around the 30 per cent-40 per cent band between investors and issuers.
‘[On] a cumulative basis, 72 per cent of investor respondents and 52 per cent of issuer respondents indicate that an explicit response from the board regarding improvement to pay practices should be made at opposition levels at more than 30 per cent and more than 40 per cent, respectively,’ states ISS in a report on the survey’s findings.
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