Print
E-MailMaria Vu is Senior Director of Executive Compensation Research, Lisa-Marie O’Malley is Lead Analyst, and Brandon Pak is Research Analyst at Glass, Lewis & Co. This post is based on a Glass Lewis article by Ms. Vu, Ms. O’Malley, Mr. Pak, Oren Lida, and Krishna Shah.
Executive compensation continues to be an area of great interest to investors as companies seek to align the long-term interests of management and shareholders. During the 2023 proxy season in North America there was a surge of shareholder opposition on equity plans, with a rare failure in Canada and a significant rise in failures among U.S. companies.
U.S. Equity Proposal Trends
In the U.S., the number of equity plan proposals that failed to receive majority support rose to its highest level in at least five years, more than doubling year-over-year. The number of proposals that passed with significant opposition rose more than 40%. The overwhelming majority of failed proposals had excessive overhang levels, either due to the basic share request or the effects of evergreen provisions. Twelve of the failed proposals had high overhang levels (some with the help of evergreen provisions) while three of the remaining proposals shared ballots with other proposals that saw high compensation-related opposition.
From Glass Lewis’ United States 2023 Proxy Season Review. Data from Jan 1 – Jun 30, 2023.
Canadian Equity Proposal Trends
In Canada, three companies failed their say-on-pay in the first half of 2022, down from four in 2022, but still relatively high compared to pre-pandemic Canadian standards. There was one failed equity proposal in the first half of 2023, up from zero in 2022. Failed equity plan proposals are very rare in Canada, with this being the first failed vote in our coverage in more than three years. 10.9% of Canadian companies received less than 75% support for their equity plan proposals.
From Glass Lewis’ Canada 2023 Proxy Season Review. Data from Jan 1 – Jun 30, 2023.
