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Article | Executive Pay Memo North America

Agenda article: What the 2018 proxy season taught us, and why it’s important for 2019

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By Jim Kroll and Don Delves | August 15, 2018

The value of a post proxy season pause to understand what happened in 2018 and what lessons can be learned for 2019 was the focus of Willis Towers Watson’s recent article in Agenda. 

The 2018 proxy season did not produce materially different say-on-pay results, even though we saw a rise in failed votes. Even so, a review offers some helpful guidance to prepare for future say-on-pay proposals.

In a recent Agenda article, we presented observations and tips from this most recent proxy season, including the:

  • Importance of both planning and not growing complacent, particularly after years of strong say-on-pay vote results
  • Awareness that both details and actions matter, whether it comes to telling your pay-for-performance story or refining incentive programs following a low vote.

Agenda subscribers can view the full article here.

All indications suggest that many familiar compensation topics will remain prominent from a governance perspective during the 2019 proxy season. As the largest investors continue to examine pay-for-performance alignment, their focus continues to shift to how compensation programs are aligned and what the compensation committee’s rationale is when executive pay design changes are introduced. Consequently, companies proactively engage shareholders to help them better understand that alignment.

Shareholders and portfolio companies are discussing far more than traditional executive pay topics as investors ask broader questions about how pay is aligned with strategy and broader workforce issues like gender pay parity, pay fairness and other human capital matters. Increasingly, board members want to know where the company stands on these matters, reflecting the evolving interest in compensation topics. For instance, we’re mindful that some investors and proxy advisors are taking a closer look at director pay that is consistently higher than peers.

The momentary pause after the proxy season is an opportunity to study 2018 proxy season lessons and begin planning for the next proxy season.

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