Skip to main content
Article | Insider

Companies will provide feedback to proxy advice, if allowed by SEC

Executive Compensation
N/A

By Steve Seelig | February 7, 2020

A Willis Towers Watson poll reveals how companies would respond to the SEC’s proposed amendments to its proxy solicitation rules.

The majority of U.S. publicly traded companies will respond to proxy advisor voting recommendations if given the opportunity by the Securities and Exchange Commission (SEC), according to a Willis Towers Watson poll conducted in December 2019 of compensation and HR professionals at 105 publicly traded U.S. companies.

In November 2019, the SEC proposed amendments to its proxy solicitation rules to improve the accuracy and transparency of proxy voting advice. The proposed rule changes would require proxy advisors to disclose any potential conflicts of interest to clients, allow companies to provide feedback on proxy advice (including factual errors) before it is disseminated to institutional shareholders and permit companies to attach their own hyperlinked statement to the proxy advisors' recommendations.

83%
Companies that believe the regulations, if finalized, would cause proxy advisors to be more transparent.

A large majority of companies (83%) believe the regulations, if finalized, would cause proxy advisors to be more transparent, and 40% would share hyperlinked statements to proxy advisor recommendations with their institutional investors to further communicate their executive pay philosophy. More specifically, 81% would speak up if they found a factual error: Six in 10 companies (59%) consider factual errors to be a big problem. Additionally, if companies disagreed with proxy advisor testing methodology, or if they received “against” voting recommendations, nearly half (46% and 47%, respectively) said they would provide feedback.

The poll also revealed that companies and their compensation committees will be placing greater emphasis on people issues over the next few years. This comes following a recent SEC proposal to expand Form 10-K disclosure of human capital measures to enhance shareholder understanding of their importance. More than nine in 10 respondents (92%) say managing human capital resources will be important to their success over the next three years, compared with 71% over the past three years. Additionally, nearly three in four respondents (72%) believe their compensation committees will oversee fair pay and gender pay issues in the next three years, compared with 52% that do so currently. More than half (54%) also say their compensation committees will be responsible for inclusion and diversity issues in the next three years, up from 45% currently.

Author

Senior Director, Executive Compensation (Arlington)

Contact Us
Related content tags, list of links Article Insider Executive Compensation