News & Insights

Directors Governance Center

June 6, 2014

Proxy Advisors' Influence on Say on Pay (Pay Governance)

In a recent report, Pay Governance examined the influence that ISS and other proxy advisory services have over Say on Pay (SOP) votes. The report found that the impact of ISS recommendations on SOP votes is generally between 2530%.

The Pay Governance report also surveyed ten of the largest institutional investors to measure proxy advisors influence and determine whether they actually advocate for investors policies and preferences. Some of the reports findings include:

*A majority of the institutional investors surveyed (7 of 10) subscribe to a proxy advisor service. However, less than half of the subscriber group (3 of 7) reported following advisors recommendations as a default approach.

*Concerns of proxy advisors do not align perfectly with those of investors. While both groups share the same big picture concerns, proxy advisors focus more on specific plan provisions and details.

Pay Governance LLC is an independent firm that serves as an advisor on executive compensation matters. Its stated goal is to ensure that its clients' executive programs are aligned with performance and supportive of appropriate corporate governance practices.