As required by the Dodd-Frank Act, this year’s corporate proxy statements include a “say when” vote that asks investors to express their views on whether advisory votes on compensation should be held every year, every two years, or every three years. 

Earlier this year, issuers were recommending triennial votes by a 2-to-1 margin, but most investors voted instead for annual frequency. So far, there has been 63.6 percent average approval for annual, more than twice the 29.5 percent support for triennial, according to ISS data as of March 15. There has been 4.9 percent support for biennial votes, while 2 percent have abstained. 

At six large-cap firms, investors overwhelmingly defied management’s triennial recommendation and gave more than 60 percent support for annual votes. Examples include: Monsanto (62.2 percent support for annual); Rockwell Automation (64.1 percent); Varian Medical (75.8 percent); AmerisourceBergen (75.4 percent); Air Products (60.3 percent); and Jacobs Engineering Group (67 percent).  

So far, only one of the 14 large-cap firms with a triennial recommendation has won majority approval from investors for its chosen frequency, according to ISS data. That firm was Tyson Foods, which has a dual-class equity structure. Within Russell 3000 index, just 15 of 36 issuers have earned majority support for triennial votes; most of those firms have unequal voting rights or significant holdings by insiders.    

In response to these early votes, a significant number of companies have recommended annual votes in the past few recent weeks. At the 106 S&P 500 firms that have filed proxy statements, 61 companies (57.5 percent) have endorsed annual votes, followed by 38 issuers that preferred triennial, three that called for biennial votes, and four firms that made no recommendation, according to ISS data. Coca-Cola Enterprises, AES, Newmont Mining, Lennar, Eli Lilly, Weyerhaeuser, Whirlpool, and Humana Inc. are among the large-cap firms that have endorsed annual votes in recent proxy filings. 

There also has been a similar evolution in management views at smaller companies. Among the 241 Russell 3000 firms that have released proxy materials, a plurality (46.1 percent) have endorsed annual votes, as compared to the 45.2 percent with triennial recommendations, according to ISS data as of March 15. A week ago, the percentage of Russell 3000 companies with annual recommendations was 38.2 percent.   

However, triennial recommendations remain more common at small firms outside the Russell 3000. At the 94 firms with “say when” on the ballot, a large majority (68.1 percent) have called for triennial votes, according to ISS data.