2018 Say on Pay Report Split Results on Our Four Proxy Season Predictions

Two of the predictions our team made at the beginning of the 2018 proxy season proved correct, while two turned out incorrect.

What We Correctly Predicted

As predicted, the new CEO Pay Ratio disclosure was not a primary driver of 2018 Say on Pay vote results, as CEO pay has long been publicly available, and median employee pay disclosure provided few additional insights about income inequality that were not previously known. Our team also correctly predicted that vote support on environmental proposals would reach its highest level. Median vote support on these proposals was 31%, which was higher than any previous year. Additionally, 5 environmental proposals passed, versus 7 proposals in the prior 7 years.

Where Our Predictions Fell Short

Investors’ focus on the topic of boardroom gender diversity continued to grow throughout 2018, but changes in actual demographics fell below our team’s prediction. By the end of 2018, women held 18.6% of Russell 3000 Board seats, well below our prediction of 20%. Our final prediction was that S&P 100 companies would continue to have lower average Say on Pay results than the remaining Russell 3000 companies, and that the gap would widen in 2018. Instead, we observed the opposite during this proxy season as average vote support for the S&P 100 (90.3%) and the remaining Russell 3000 (89.6%) converged.