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Annual meeting season can sometimes be a wild ride and this year appears it
Annual meeting season can sometimes be a wild ride and this year appears it
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Early Say-on-Pay Voting: BlackRock’s Votes “Against” Increase

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May 19, 2021 |

Thanks to Lynn Jokela

Annual meeting season can sometimes be a wild ride and this year appears it might be even more so. Recently, BlackRock released its “Q1 2021 Stewardship Report” and it shows the asset manager’s continued focus on sustainable business practices. BlackRock has stepped up its engagements, the report says they’re up 24% year-over-year.
For compensation matters (which includes say-on-pay and say-on-frequency), voting statistics included in an appendix to the report show for the Americas, in the first quarter alone, BlackRock has voted “against” 15% of proposals, which is more than double the number at this time last year. Back in March, I blogged about BlackRock’s approach to compensation engagements, which the asset manager summarized in a memo. One thing BlackRock wants is transparency about executive compensation structures and the outcomes sought.
For more insight, BlackRock releases “vote bulletins” for some annual meeting matters and two recent bulletins explain the asset manager’s rationale for voting “against” a say-on-pay proposal and another where the asset manager voted “for” a say-on-pay proposal. Although several factors play into BlackRock’s vote decisions, BlackRock mentions company disclosures in each of these excerpts showing that company disclosure can help influence the vote:
Vote “against” say-on-pay
While the amended compensation plan has been the primary focus of shareholders and the media, the Compensation Committee also used discretion for 2020 bonus payments. Although the corporate financial thresholds in the annual incentive program were met, the committee used its discretion to fund the bonus pool at 80% of target. As discussed in our commentary on our approach to incentives aligned with value creation, where a Compensation Committee has used its discretion in determining the outcome of any compensation structure, we expect transparency with respect to how and why discretion was used, which we felt was lacking in this instance.
Based on a pay and performance misalignment, as well as a mid-cycle adjustment to the plan based on short term stock declines, BIS voted against the ratification of Named Executive Officers’ compensation and the election of relevant directors on the Compensation Committee.
Vote “for” say-on-pay
In reaching our decision on compensation, we were informed by both engagements with the company, and the company’s public disclosures.
Moreover, as stated in additional proxy soliciting materials published in mid-April, in deciding its 2020 compensation the board took into account shareholder feedback received over the past year. This included; “eliminating the three 1-year sales goals from the company’s performance share units (PSUs), adding more structure to our annual incentive plan, capping the value of the company’s executive car and driver benefit, and doubling our stock ownership guidelines for senior executives.”
For these reasons, we supported management’s Say on Pay proposal.
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