This Thought Piece highlights examples of certain key disclosures that the proxy advisory firms want to see after a low say-on pay vote. While some of the following examples are from proxy statements published by companies after a low say-on-pay score, others are from companies that publish these “best practice” disclosures as a matter of course.
What Proxy Advisors Expect
ISS’ review takes into consideration the following when a say-on-pay proposal receives less than 70% support
- The disclosure of details on the breadth of engagement, including information on the frequency and timing of engagements, the number of institutional investors, and the company participants (including whether independent directors participated);
- The disclosure of specific feedback received from investors on concerns that led them to vote against the proposal;
- Specific and meaningful actions taken to address the issues that contributed to the low level of support;
- Other recent compensation actions taken by the company and/or the persistence of problematic issues;
- Whether the issues raised are recurring or isolated;
- The company’s ownership structure; and
- Whether the proposal’s support level was less than 50 percent, which would warrant the highest degree of responsiveness.
ISS states that it will generally recommend a vote against the say-on pay proposal and incumbent compensation committee members If the company has demonstrated poor responsiveness, but may limit the adverse recommendation to the say-on-pay proposal if the board has demonstrated a limited degree of responsiveness.
Glass Lewis’ review takes into consideration the following when a say-on-pay proposal receives less than 80% support³
- The board should demonstrate a commensurate level of engagement and responsiveness to the concerns behind the disapproval, with a particular focus on responding to shareholder feedback.
- Compensation committee should demonstrate in its proxy statement a level of response to a significant vote against.
- Responses we consider appropriate include engaging with large shareholders, especially dissenting shareholders, to identify their concerns, and, where reasonable, implementing changes and/or making commitments that directly address those concerns within the company’s compensation program.
Glass Lewis’s 2025 Benchmark Policy Guidelines say that “[i]n the absence of any evidence in the disclosure that the board is actively engaging shareholders on [their compensation concerns] and responding accordingly, we may recommend holding compensation committee members accountable for failing to adequately respond to shareholder opposition.”
Disclosure Examples
For companies with low say-on-pay votes, it is important that disclosures related to outreach and responsiveness are easy to locate. We recommend that companies hit the highlights of their responsiveness in the Proxy Summary with a cross-reference to a standalone engagement section in the CD&A, apart from their normal engagement disclosures in corporate governance. Many companies also disclose highlights related to their compensation engagements in their letters from the compensation committee (at the start of CD&A) and letters from board leadership (at the start of the proxy). Well-designed graphic elements are also critical to easily show the breadth of engagement and response to feedback as well as other key aspects of program design, including its link to company strategy and performance.
Presenting Compensation in the Proxy Summary
The Proxy Summary provides prime real estate in the opening pages of the document to begin to address how the company engaged with shareholders as a result of the prior year low say-on-pay vote. That said, to reduce duplication, consider a “light” approach to compensation information in the Proxy Summary with the full compensation story being addressed in detail in the CD&A.
Elements to consider for the Proxy Summary, as appropriate:
- The breadth and scope of the business (background about the company)
- Business highlights (not necessarily specifically tied to compensation metrics, although financial and non-financial results tied to compensation metrics should be included)
- Compensation elements and their metrics
- Pay for performance alignment over time – with the performance metric(s) that is most relevant for the company and its industry
- Compensation governance (“what we do / don’t do”)
- Shareholder outreach and a summary of resultant changes
3M Co
In addition to a focus on at-risk compensation, disclosure highlights actual payouts under AIP and performance shares as well as board responsiveness to the say-on-pay vote
JetBlue Airways Corporation
Includes more detailed coverage of its stockholder engagement in its proxy summary and addresses how its compensation program supports business strategy before providing an overview of its business
Johnson & Johnson
Provides an overview of its strategy and how it delivers value for its shareholders before linking its elements of compensation to business and performance; also addresses continued engagement with shareholders around say-on-pay even following a higher vote
Using the CD&A Executive Summary to Tell Your Compensation Story
The purpose of the CD&A is to give investors a clear and complete understanding of the company’s compensation policies and decisions so that they may determine if: (1) the program is designed to align pay and performance and (2) the program works as intended. Companies often start with an executive summary that provides an opportunity to articulate the effectiveness of a compensation program through an overview of the compensation program’s most important attributes, changes for the applicable year, and a high-level explanation of key compensation committee decisions.
The CD&A summary is typically more expansive than that in the proxy summary, though certain key elements are frequently repeated. Each of the examples in this section includes both the proxy summary discussion of executive compensation and the CD&A Executive Summary to illustrate the different approaches taken in these complementary but different sections of the proxy statement.
Elements to consider for the CD&A Executive Summary, as appropriate:
- Business or performance highlights, particularly with respect to performance measures used in the incentive plans
- Compensation philosophy and objectives
- Overview and rationale for current pay elements, including weightings and underlying performance metrics, as well as how the performance metrics support the company’s strategic priorities
- Compensation highlights from the last year, including payouts under incentive programs
- Say on pay results from the prior year (or over a three to five year period to demonstrate that the low SOP vote was an anomaly)
- Any changes to the compensation program, especially if in response to recent say on pay results or stockholder engagement
- How the program has aligned pay and performance and created value for shareholders over time, whether that is actual pay, realizable pay, or plan payouts over a three or five year period
- Compensation governance (“what we do / don’t do”)
Bio-Techne Corporation
Proxy Summary highlights engagement and responsive actions taken related to executive compensation; CD&A Executive Summary includes engagement in key highlights on the introductory page then presents an expanded discussion on shareholder engagement and actions taken followed by discussion of how the executive compensation program works and how it supports and aligns with creation of shareholder value
Proxy Summary – Executive Compensation Highlights
CD&A Key Highlights & Executive Summary
General Motors
Proxy Summary includes a narrative explanation of shareholder engagement and responsiveness and a visual overview of the compensation plan design; CD&A Executive Summary begins with strategy and performance highlights then a one-page summary of program changes and disclosures enhancements along with a multi-page review of outreach and the correlating actions taken by the company in response, also includes a narrative overview of the outcomes of performance payouts to reinforce pay for performance
Proxy Summary – Compensation Highlights
CD&A Executive Summary
Boeing Company
Proxy Summary utilizes bullets to explain key highlights followed by a visual overview of the compensation plan design; CD&A Executive Summary begins with a narrative overview of performance, leadership changes and the new CEO compensation package, then a narrative overview (using callout boxes) to detail changes made in response to engagement before moving into how the compensation program aligns with shareholder interests and an overview of the compensation program structure, including a summary of payouts for incentive compensation
Proxy Summary
CD&A Executive Summary
Shareholder Outreach and Changes Made as a Result
In the year(s) following disappointing say on pay results, companies are expected to share details of their outreach efforts, feedback received, and actions taken in response.
First and foremost, proxy advisors will be looking for a robust presentation of shareholder engagement. In addition to discussing efforts made to solicit feedback from shareholders since the last Annual Meeting, companies should present facts about the feedback from shareholders voting (in specific terms and not generalities or just by topic) and how the company addressed these concerns.
Any changes to the compensation program should be clearly highlighted and emphasized. If changes were made following last year’s say-on-pay vote, we would suggest visually showing changes (over a multi-year period if appropriate) and emphasizing that the evolving program is in line with shareholder feedback – even better if the program has evolved in line with the company’s strategic transformation initiatives.
Use of graphic elements is critical to easily show the breadth of engagement and response to feedback. Examples of compensation-specific graphics include:
- Key engagement statistics (i.e., who/what/when)
- How the Board participated in and learned about these engagements
- “What we heard” and “how we responded” to directly tie compensation decisions to shareholder feedback
- Shareholder engagement cycle
- Timeline to demonstrate the evolution of the compensation program to better align with shareholder interests
- Multi-year SOP results to show where a low SOP vote has been an anomaly and/or adequately addressed
Salesforce, Inc.
Includes an overview of year round engagement efforts as well as targeted efforts related to the prior year say-on-pay vote, including timing of those efforts and what the company heard and how they responded
Proxy Summary – Stockholder Engagement
Zebra Technologies Corporation
Proxy Summary includes an overview of engagement efforts, who participated and a high level overview of key responsive actions; in CD&A, the company drills down into more detail related to these engagement efforts by period and concludes with board actions in response to the feedback received
Proxy Summary – Stockholder Engagement
CD&A Executive Summary
Palo Alto Networks
Presents a succinct overview of who the company engaged with, who from the company participated, the feedback received and how the compensation committee responded
Executive Compensation
C.H. Robinson Worldwide, Inc.
Includes column with effective date of applicable changes, also directly links evolution of compensation practices to drive alignment with strategy and long-term success in addition to other considerations
Proxy Summary
Prudential Financial, Inc.
Narrative response focused on acknowledging shareholder concerns and providing the compensation committee’s perspective when no responsive changes were made to the compensation program
Proxy Summary
Letter from the Compensation Committee
After a low/failed say-on-pay vote, we recommend a carefully considered Compensation Committee Letter to explain their rationale for compensation decisions and any additional changes that have been made.
Shareholders hold the compensation committee accountable for executive pay practices and want to hear from the committee that they heard the concerns and have considered them. Therefore, a letter at the outset of the executive compensation section of the proxy statement can allow the committee to present a transparent message, often in a more persuasive tone, that focuses on shareholder engagement and responsiveness and goes beyond the required Compensation Committee Report, which states simply that the committee discussed the CD&A with management and recommended to the board that the CD&A be included in the proxy
Companies should also leverage formatting to ensure key messages are highlighted, such as descriptive headings, callout boxes or other graphic elements, and cross-references to key sections of CD&A.
General Motors
Addresses engagement with shareholders after a disappointing say-on-pay vote, highlighting refinements made and increased disclosures provided in response, then focuses on pay for performance alignment
Palo Alto Networks
Uses design features such as headings, bold and alternate colored font to highlight the key discussion points related to program design, shareholder engagement efforts and resulting design changes following a low say-on-pay vote
Conagra Brands, Inc.
Uses commentary in left column to highlight the company’s engagement efforts, to demonstrate understanding of key shareholder concerns and to explain the company’s approach to executive compensation
BONUS: Halliburton
Provides a Q&A with the Compensation Committee Chair in addition to a letter from its compensation committee
Appropriately Challenging Goals
Investors continue to scrutinize executive pay and hold compensation committee members accountable when compensation programs fall short, with performance-based incentives serving as the lynchpin of both compensation structure and effective disclosure. Companies should strive to provide clear disclosure of the components and mix of short and long-term incentives and demonstrate that the compensation program is thoughtfully structured with rigorous goals that appropriately align executive and shareholder interests and support corporate strategy and performance.
When determining whether to support a company’s executive compensation program, shareholders place considerable importance on the processes used by the compensation committee and are much more likely to support a company’s executive compensation, and compensation committee members, when the committee has a rigorous and thoughtful process that is clearly and comprehensively disclosed. Shareholders will want to see that the goals on which compensation is based are challenging, given the company’s business model, industry, and past results, and how the process for setting
those goals takes company/industry-specific factors into account, resulting in goals that evolve as those factors evolve.
Best practice companies:
- Include a comprehensive snapshot of the metrics, weighting, rationale for the metrics, and high-level description of how they are calculated early in the proxy summary or CD&A
- Pair this disclosure with how the goals are established and set it alongside actual results to demonstrate goal rigor
- Provide detailed information in the discussion of incentive compensation later in the CD&A
- Clearly link each pay element to components of the company’s strategy and business performance throughout the discussion
- Highlight recent changes to the compensation program, emphasizing responsiveness to shareholder concerns or where changes were designed to better align compensation with strategic initiatives
IBM
Utilizes a multi-year overview of payouts under AIP and long-term equity awards to demonstrate the appropriateness and rigor of performance goals that help support drivers of the company’s business
Adobe Systems Inc.
Includes narrative explanations of the rigor of performance targets followed by strong visual overviews of results to demonstrate pay-for-performance alignment
Netflix Inc.
Provides a timeline demonstrating the evolution of the compensation program in response to shareholder feedback
Clear Link Between Compensation Program and Strategy
Investors want the company’s compensation structure to: align executive interests with shareholder interests, produce results that reflect company performance, be commensurate with peers, and rely on performance metrics that advance the company’s strategy.
Therefore, companies should use every opportunity to strengthen the messaging around how incentive compensation metrics support company strategy and pay for performance, including clearly demonstrating how each pay element links to such components of strategy and performance. Where applicable, companies should highlight recent changes to the compensation program to align with strategic initiatives.
- In the CD&A summary, companies should highlight the metrics used across the incentive program and provide a brief explanation of how these metrics support the company’s strategic priorities.
- In the broader discussion of the compensation program, disclosures for performance metrics used in short-and long-term incentive awards should be detailed and nuanced to help investors understand the unique characteristics of a company’s program and the metrics used to determine payouts. Companies should explain the rationale for the selection of performance metrics used in the applicable year (including how goals are set and how they relate to the annual operating plan, guidance/forecast, or prior year performance) and how they incentivize different components of a company’s strategy and business performance.
Honeywell International Inc.
Embeds within the elements of compensation table explanations of how each component of compensation links to strategy and performance
Exxon Mobil Corporation
Uses narrative and infographics to explain how long-term strategic objectives are integrated into the process of setting performance goals
S&P Global Inc.
Includes additional information on how plan design within the link to strategy & business column and adds links to more detailed discussion later in CD&A
Scorecard to Highlight NEO Performance
Investors want to understand the factors the compensation committee considers and how the actual compensation paid to an officer was tied to their performance
Accomplishments – especially when the committee has some discretion.
In addition to providing additional transparency, NEO scorecards are particularly effective when incentive plans are non-formulaic, performance metrics differ by NEO, or discretion is used in determining the achievement of one or more performance metrics to (1) help investors understand the factors used by the compensation committee to determine accomplishments and (2) demonstrate the rigor of the evaluation process. Scorecards also provide an opportunity to explain changes made to a particular NEO’s compensation or a one-time award given that is unique to one or more NEOs, whether in light of shareholder feedback, job changes, or other corporate events.
Overall presentation of scorecards varies from simple to elaborate:
- Some are short overviews of individual elements of compensation, while others are comprehensive disclosures of pay and individual performance accomplishments during the year.
- Presentations can range from tables of accomplishments by individual to highly visual overviews that include pictures of the NEOs and primary responsibilities in addition to the compensation information.
- Many companies provide a scorecard for each named executive officer, but some only include a fulsome scorecard for the CEO and summary descriptions for the other named executives.
Scorecards are best placed at the start of the CD&A to provide context for the discussion that follows or near the end – after the various compensation components are explained – to summarize the compensation story.
PepsiCo Inc.
Presents highlights of NEO performance and compensation overview in a tabular overview
JPMorgan Chase & Co.
Includes detailed performance summary (while also demonstrating the link between performance and strategic initiatives) as well as thumbnail photo and brief biography
Walmart Inc.
Includes overview of key compensation decisions and stock ownership; also visually demonstrates pay mix as well as actual incentive payouts, including as a percentage of target
