With a majority of vote results in for the 2023 annual meeting cycle, we’ve seen companies in the “yellow card zone” on Say on Pay (i.e., 50%-80% support) at the highest level since 2019. For any Say on Pay vote result less than 80% support, the proxy advisors expect more robust engagement with shareholders (and disclosure of both the engagement and any compensation changes made) prior to the next annual meeting.
Implications for Canadian Companies
Understanding the proxy advisor policies on Say on Pay and other AGM ballot votes remains important for public company compensation and governance committees. The newer development is that companies should focus on the specific preferences of their particular investors, as shareholders increasingly develop their own policies and rely less on proxy advisor guidance to vote their shares.
At a high level, we think this process could look like:
• In partnership with investor relations, review the composition of the company’s top 5-15 institutional holders
• Summarize key voting policies on Say on Pay, director over boarding, gender/ethnic board diversity, and director tenure at these top 5-15 investors
― Understand how these policies differ from the company’s current pay programs and Board composition
― Understand how these policies differ from those of ISS and Glass Lewis
• Grounded first in business strategy and the investor perspective, then secondarily in market practice and proxy advisor perspectives, consider whether any differences in the company’s compensation programs (and potentially Board composition) versus stated policy preferences from these stakeholders warrant review and potential change.
• If Say on Pay support is <80%, consider a more comprehensive shareholder engagement strategy to include meetings with top shareholders on compensation programs and subsequent disclosure of this engagement; Meridian’s forthcoming client alert on shareholder engagement will cover this process in greater depth.
Questions regarding this Client Update or executive compensation technical issues may be directed to:
Christina Medland at (416) 566-1919, or cmedland@meridiancp.com
Andrew McElheran at (647) 472-7955, or amcelheran@meridiancp.com
Andrew Stancel at (647) 382-7684, or astancel@meridiancp.com
Matt Seto at (647) 472-0795, or mseto@meridiancp.com
Andrew Conradi at (647) 472-5231, or aconradi@meridiancp.com
Rachael Lee at (647) 975-8887, or rlee@meridiancp.com
Kaylie Folias at (416) 891-8951, or kfolias@meridiancp.com
Jason Chi at (647) 248-1029, or jchi@meridiancp.com
Gabrielle Milette at (905) 242-0503, or gmilette@meridiancp.com
Wali Ahmed at (647) 208-0132, or wahmed@meridiancp.com
This report is a publication of Meridian Compensation Partners, LLC, provides general information for reference purposes only, and should not be construed as legal or accounting advice or a legal or accounting opinion on any specific fact or circumstances. The information provided herein should be reviewed with appropriate advisors concerning your own situation and issues.
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