Magazine article HRMagazine

High CEO Pay Leads to Lower Shareholder Support

Magazine article HRMagazine

High CEO Pay Leads to Lower Shareholder Support

Article excerpt

Boards of directors that give chief executive officers higher pay opportunities are more likely to receive lower levels of support in shareholder "say-on-pay" votes than those with lower CEO pay, according to a Towers Watson analysis released in March.

The study also found that the likelihood of receiving lower shareholder support triples for companies with poor performance compared to top-performing companies.

"Shareholders are really looking for companies to stay in the middle of the fairway with respect to pay and avoid poor performance," says Todd Lippincott, leader of Towers Watson's executive compensation consulting business for the Americas.

Almost 32 percent of companies with CEO pay opportunities in the top quartile received low say-on-pay shareholder support in last year's proxy season, compared with 19 percent of companies with CEO pay near the median.

Companies that performed poorly-those in the bottom one-third in total shareholder return-were more than three times more likely to receive less than 70 percent shareholder support in nonbinding say-on-pay votes. …

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