IN THIS ISSUE
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our website at www.semlerbrossy.com/COVID/ for more detail.
1
This section summarizes executive and Director pay-related actions announced publicly by Russell 3000 companies in response to the
COVID-19 pandemic. See more detailed coverage of pandemic-related pay actions at www.semlerbrossy.com/COVID/
• COVID-19 started to disrupt companies’ operations in January; the breadth and financial impact of the pandemic escalated during
March and April; and now, corporate leadership teams are faced with challenging decisions to stabilize operations, re-open offices
and stores, and manage broader human capital issues within financial constraints
• Through May 30, 596 Russell 3000 companies announced or publicly disclosed compensation actions in response to COVID-19; we
note that some companies did not announce the magnitude of reductions and acknowledge that the number of companies
implementing reductions over this period may be higher due to unannounced actions
• Thus far, the median CEO salary reduction is 40%; although,
23% of companies have announced a 100% reduction, while
21% announced a 50% reduction
• By comparison, the most common salary reduction for other
NEOs and senior members of Management is 20%
• Many companies have announced cash retainer reductions
for Directors that match salary reductions for their CEO - the
median reduction to Director cash retainers is 50%; however,
24% of Directors have forfeited 100% of their cash retainer
• The number of pay reduction announcements spiked in the
first week of May, but has been on a downward trend since
the second week of May
Source: Semler Brossy data and analysis; Data is through 5/30/2020.
Executive & Board:
63%
CEO, Other NEOs, & Other Senior
Mgmt:
64%
Executive Only: 36%
CEO & Other NEOs: 29%
Board Only: 1%
CEO Only: 7%
Total
n: 596
Management
n: 585
71
39 37 32
63
199
26
12 2124
39
25
6
1
12
1
1
1
98
5258
58
103
44
16
5
4/5 -
4/11
4/12 -
4/18
4/19 -
4/26
4/26 -
5/2
5/3 -
5/9
5/10 -
5/16
5/17 -
5/23
5/24 -
5/30
Board Only
Executive Only
Executive & Board
25%
16%
12%
21%
1% 1% 1%
23%
0% -24%
n: 106
25%n: 69
26% -49%n: 50
50%n: 88
51% -74%n: 5
75%n: 5
76% -99%n: 5
100%n: 99
2
Specialty Retail:
28%/52
Consumer Discretionary: 31%/187
Hotels, Restaurants & Leisure:
27%/50
Industrials: 22%/133
Textiles, Apparel & Luxury Goods: 11%/21
Health Care:
13%/75
Household Durables: 10%/19
IT: 9%/51
Internet & Direct Marketing Retail: 4%/8
Real Estate: 6%/35
Other: 20%/37
Comm. Services: 5%/30
Energy: 8%/49
Materials: 3%/19
Consumer Staples: 1%/7
Financials: 2%/9
Utilities: 0.2%/1
0 100 200 300 400 500 600Announcements
• The number of announcements by Russell 3000 Industrials companies increased from 101 to 133 since our last report, the largest
increase of any sector over that period
• The Consumer Discretionary and Industrials sectors (which includes Airlines and adjacent industries) continue to have the highest
percentage of announcements due to the impact of social distancing and quarantine measures on their operations
• We have observed a similar prevalence of pay reduction announcements for Russell 3000 and S&P 500 companies, which suggests
the pandemic’s impact on executive and Board compensation has been broad, regardless of company size
Russell 3000 S&P 500
Excludes Russell 3000 sectors below ten announcements: Financials (9/2%) Cons. Staples (7/6%), Utilities (1/1%) and S&P 500 sectors
below seven announcements: Energy (6/22%), Real Estate (6/19%), Comm. Services (5/20%), Materials (4/14%), Cons. Staples
(2/6%), Financials (1/2%).
187
133
7551 49 35 30 19
329
392
540
369
156193
113 128
Cons.Discr.56.8%
Industrials33.9%
HealthCare
13.9%
IT13.8%
Energy31.4%
RealEstate18.1%
Comm.Services26.5%
Materials14.8%
No Announcements
Announced Reductions
34
25
148
6570
59
71
Cons. Discr.52.3%
Industrials35.7%
Health Care23.7%
IT11.3%
3
• The current number of failures (34) and failure rate
(2.3%) is the same as this time last year
• The 91.0% average vote result thus far in 2020 is 10
basis points higher than the average vote result at this
time last year but is 50 basis points lower than our last
report
• One-third of the S&P 500 has received vote support
below 70% at least once since 2011
• 10% of the Russell 3000 and 8% of the S&P 500
constituents have failed Say on Pay at least once over
the same period
34 Russell 3000 companies (2.3%) failed Say on Pay thus far in 2020. 25 companies failed since our last report and are highlighted in
bold on page 5 of this report.
8%
33%
68%
10%
28%
58%
Below 50% Support at Least Once
Below 70% Support at Least Once
Below 90% Support at Least Once
Vote results for current S&P 500 and Russell 3000 constituents since 2011
S&P 500 Russell 3000
72% 73% 76% 75% 76% 75% 78% 75% 76% 78% 76%
21% 19% 15% 17% 16% 17% 15% 16% 15% 13% 18%
6% 6% 6% 6% 6% 6% 5% 6% 6% 6% 4%
1.4% 2.6% 2.5% 2.4% 2.8% 1.7% 1.5% 2.6% 2.7% 2.3% 2.3%
2011Avg: 90.9%
n: 2,660Failures: 37
201289.8%2,226
57
201390.6%2,253
57
201490.9%2,545
60
201590.8%2,157
61
201690.9%2,117
35
201791.7%2,357
35
201890.2%2,154
57
201990.5%2,237
60
2019 YTD90.9%1,501
34
202091.0%1,458
34
Below 50%
50 - 70%
70 - 90%
90%+
PERCENTAPPROVAL
4
• The current average Say on Pay vote result for companies
that received an ISS “Against” recommendation is 30
percentage points lower than for companies that received
an ISS “For” recommendation
• The 30-percentage point gap is at the higher end of the
historical average range of 24 to 32 percentage points
• At this time last year, we observed a 30% difference, which
held at 30% by year end; at this time two years ago, we
observed a 31% difference, which held at 31% by year end
• ISS has recommended “Against” 35% of companies in 2020
that also received an “Against” recommendation in 2019
• Companies that received an “Against” recommendation
from ISS in 2019, but did not receive an “Against” in 2018,
have received a second consecutive “Against” at a rate of
27% in 2020
• This rate jumps to roughly 50% for companies that
received two or more consecutive “Against”
recommendations
• This is consistent with the results observed from 2014 to
2019
Source: Semler Brossy data and analysis; ISS Voting Analytics. Russell 3000 sample effective as of July 1, 2019.
93% 80% 78% 77% 77% 75% 74% 73% 73% 68% 64%
5%
14% 16% 16% 17% 13% 17% 23% 24% 30%
28%
2%
2% 4% 3% 4% 6% 5%
4% 2%
3%
4%
4% 1% 4% 2% 5% 4% 1% 4%
UtilitiesAvg.: 94.5%
n: 57
ConsumerStaples91.0%
51
Industrials91.8%
245
Real Estate90.9%
125
Financials91.4%
317
InformationTechnology
89.4%157
Health Care89.3%
157
ConsumerDiscretionary
91.5%147
Materials91.4%
91
Comm.Services90.1%
37
Energy89.0%
74
90%+ 70 - 90% 50 - 70% Below 50%
94%
64%
0%
25%
50%
75%
100%
ISS Forn: 1,322
ISS Againstn: 136
2011 2020
75
16
5 0 2
28
14
3 4 5
"Against" in2019
"Against" in2018-19
"Against" in2017-19
"Against" in2016-19
"Against" in2015-19
"Against" in 2020
"For" in 2020
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5
2020 Failed Say on Pay Vote Results1
Russell 3000, n=34 Likely Causes of Votes Under 50%
Number Pay and Problematic Rigor of Shareholder Non- Special
Say on Pay Vote Results of Performance Pay Performance Outreach and Performance Awards/ Mega-
Company 2020 q 2019 YOY Failures Relation Practices Goals Disclosure Based Equity Grants
Intel Corporation 50% 60% -10% 1 X X X
Noble Corporation plc 50% 56% -7% 1 X X
Altria Group, Inc. 49% 95% -45% 1 X X X
Kilroy Realty Corporation 49% 15% 34% 5 X X
Westwood Holdings Group, Inc. 49% 64% -15% 1 X X X
Penns Woods Bancorp, Inc. 49% 54% -5% 1 X X X
Everbridge, Inc. 48% 98% -50% 1 X X X
CIM Commercial Trust Corporation 47% - - 1 X X
IQVIA Holdings Inc. 46% - - 1 X X X X
Investors Bancorp, Inc. 46% 94% -48% 1 X X
Home Bancshares, Inc. (Conway, AR) 46% 92% -46% 1 X X X X
Fidelity National Information Services, Inc. 46% 93% -47% 1 X X X
Paycom Software, Inc. 45% 90% -45% 1 X X X
Tandem Diabetes Care, Inc. 45% 50% -6% 1 X X X X
Vornado Realty Trust 43% 65% -22% 1 X X X
Laredo Petroleum, Inc. 42% 68% -25% 1 X X
Colony Capital, Inc. 42% 69% -27% 1 X X
SS&C Technologies Holdings, Inc. 42% 42% 0% 2 X
Federal Realty Investment Trust 42% 93% -51% 1 X X
Bunge Limited 41% 82% -41% 1 X X X
Digimarc Corporation 40% 47% -7% 3 X X
Mallinckrodt plc 38% 37% 1% 2 X X
Associated Banc-Corp 37% 94% -58% 1 X X X
Cryoport, Inc. 36% 54% -18% 1 X X X
Tutor Perini Corporation 34% 37% -2% 10 X X X
Acuity Brands, Inc. 33% 53% -20% 1 X X X
Medpace Holdings, Inc. 33% - - 1 X X
Cleveland-Cliffs Inc. 32% 70% -37% 2 X X X
Assertio Holdings, Inc. 32% 96% -64% 1 X X
U.S. Silica Holdings, Inc. 30% 95% -65% 1 X X
Daseke, Inc. 25% 96% -71% 1 X X
CVS Health Corporation 24% 90% -66% 1 X X X
QUALCOMM Incorporated 18% 79% -62% 1 X X X X
USA Technologies, Inc. 16% - - 1 X X
Count (n=34) 19 21 12 14 11 13
1 As of May 31, 2020
6
• Thus far in the proxy season, shareholders have voted on 105 social proposals and 24 environmental proposals – median support for
social proposals is 28% and for environmental proposals is 23%
• Ten social proposals (10%) and four environmental proposals (17%) have received greater than 50% support in 2020 – proposals that
received greater than 50% support since our last report include requests on Board diversity and reports on sustainability, alignment
with Paris Agreement climate goals, and political lobbying and contributions
• By comparison, 6.2% of social proposals and 0% of environmental proposals received greater than 50% support in 2019
See additional analysis and insights on ESG in executive incentives at www.semlerbrossy.com/corporate-purpose-guidance/
Shareholders submitted a proposal requesting
that O’Reilly Automotive publish a report on its
workforce’s diversity and inclusion practices.
The proposal passed with 65% vote support
• The proponents of the proposal requested
increased disclosure of employee metrics
given the company’s elevated risk from its low
retail wages and underrepresentation of
women and minorities in management
• The proponents of the proposal referenced
the sector-specific standards developed by
the Sustainability and Accounting Standards
Board (SASB) to help identify, manage, and
communicate information on these topics in a
way that is comparable to other companies
• The Board recommended that shareholders
vote “Against” the proposal and asserted that
the company maintains diversity and inclusion
policies and reports on such policies in its
Sustainability, Social & Governance Report;
additional reporting would be an inefficient
use of company resources
• ISS recommended “For” the proposal and
cited that while the company does report on
its policies, it does not disclose statistics
about its labor force such as diversity, percent
of employees earning minimum wage, etc.; as
such, the requested disclosure would benefit
shareholders and likely impact the company
positively
20% 19%23% 22% 23%
26% 28%31%
26%23%
2011n: 39
2012n: 29
2013n: 28
2014n: 45
2015n: 64
2016n: 75
2017n: 67
2018n: 42
2019n: 29
2020n: 24
20%16%
22% 21% 20% 18% 17%
26%29% 28%
2011n: 101
2012n: 115
2013n: 122
2014n: 142
2015n: 128
2016n: 132
2017n: 120
2018n: 108
2019n: 146
2020n: 105
7
• Thus far, average vote support for Director nominees
(95.6%) is equal to the average vote support at this time
last year, which is 50 basis points higher than the eventual
year-end average support from last year
• One of our proxy season predictions is that average vote
support for Director nominees will drop below 94.5% by
the end of the year
• Over the past five years, average Director election vote
support at companies that received a Say on Pay vote
below 50% in the prior year is six percentage points lower
than at companies that received above 70% vote support
78.8% 78.3% 77.5% 75.2% 76.8%
17.0% 17.2% 17.3% 18.8% 18.9%
3.9% 4.3% 5.0% 5.7% 4.1%0.3% 0.2% 0.2% 0.3% 0.2%
2016Avg: 96.6%n: 18,347
201795.7%18,306
201895.5%18,278
201995.1%17,497
202095.6%10,440
95%+ 80 - 95% 50 - 80% Below 50%
95.6% 95.5%95.2%
94.7%95.2%
96.8% 96.6% 96.6% 96.5%96.9%
2016
n: 18,347
2017
n: 18,306
2018
n: 18,278
2019
n: 17,497
2020
n: 10,440
Male Female96%
94%
90%
Above 70%Say on Payn: 59,082
50 - 70%Say on Pay
n: 3,376
Below 50%Say on Pay
n: 1,115
8
• Average vote support for equity proposals thus far in the proxy season (90.7%) is 110 basis points higher than the 89.6% average
support observed at this time last year
• Two proposals have received vote support below 50% thus far in 2020 – a stock option exchange program at Macrogenics and an
omnibus plan amendment at Daseke; two proposals received below 50% support in each of 2019 and 2018
• We expect more companies to request shares next year due to the higher dilution levels caused by equity grants made during the
challenging market environment in 2020
90% 92% 90% 92% 91% 90% 92%
83%87% 88% 85% 85% 86% 87%
79%83% 83% 83% 80%
85% 86%
0%
20%
40%
60%
80%
100%
2014n: 684
2015n: 607
2016n: 566
2017n: 678
2018n: 419
2019n: 464
2020n: 373
+90% Say on Pay 70% - 90% Say on Pay Below 70% Say on Pay
34%48% 52% 55%
65% 61% 65% 60% 63% 67% 72%
52%
43% 38% 37%30%
31% 28%32% 27%
27%22%
13% 8% 9% 8% 6% 8% 7% 8% 9% 5%
0.5% 0.4% 0.6% 0.6% 0.1% 0.6% 0.6% 0.4% 0.4% 0.6% 0.5%
2011Avg: 83.2%
n: 632
Failures: 3
201286.3%
689
3
201386.9%
781
5
201487.6%
805
5
201589.5%
786
1
201688.2%
785
5
201789.3%
829
5
201888.3%
558
2
201988.3%
565
2
2019 YTD89.6%
333
2
202090.7%
396
2
Below 50%
50 - 70%
70 - 90%
90%+
PERCENTAPPROVAL