Four additional firms--Mylan, Tower Group, Sterling Bancorp., and Manitowoc Co.--reported that they failed to win majority support for their executive compensation practices. Overall, 12 U.S.-listed companies have not obtained majority approval from their investors during say-on-pay votes this year, according to ISS data.
Mylan, a pharmaceutical firm in the S&P 500 index, earned about 48 percent support on pay during its May 4 annual meeting. It appears that investors had concerns over pay-for-performance alignment. The Pennsylvania-based company also extended executive employment agreements that include excise tax gross-up provisions, and provided limited disclosure about its engagement with shareholders after Mylan received less than 64 percent support on pay in 2011.
On May 3, the Tower Group, an insurance firm in the S&P 600 small-cap index, received 29.6 percent support, which is the second-lowest vote seen this year during an advisory vote on pay. The New York-based firm has posted low three-year returns relative to its peers, “compounded by substantial non-performance based pay elements and poor long-term incentive design,” according to the ISS report on the company. In its post-meeting 8-K filing, Tower defended its pay policies but said it “will fully consider the concerns expressed by its stockholders and the Compensation Committee will review the structure of the Company’s executive compensation programs.”
At Sterling, a regional banking firm in the S&P 600, pay-for-performance concerns also contributed to investor dissent at the May 3 shareholder meeting. As the ISS report noted: “CEO pay is significantly higher than peers (excluding the change in pension value) and the company's one- and three-year [total share returns] have not kept pace. Further, the multiple fallback structure of the annual incentive plan is incongruous with the purpose of performance-based incentive programs, offering alternative target measures when the original target is not met.”
Pay-for-performance concerns apparently were a factor at Manitowoc, a Wisconsin-based company that makes cranes and food-service equipment. The Russell 3000 firm received about 48 percent approval on compensation at its May 1 meeting. The ISS report on Manitowoc concluded that there “was misalignment between CEO pay and TSR [total shareholder return] performance relative to peers over the 1- and 3-year term and on an absolute basis over the five-year term,” and that the chief executive’s 2011 pay package was not sufficiently performance-based.
Both Sterling and Tower received more than 90 percent support on pay in 2011, according to ISS data. At Manitowoc, there was 75 percent approval last year.