New York – GMI ESG Research & Ratings, an independent provider of global corporate governance data and research, launched this week the first of a series of “Say on Pay” reports. The report looks at the first year of GMI’s Executive Pay Scorecards, which assessed the quality of compensation policy and practices at 456 different S&P 500 companies. The pay practices of 22% of the companies examined in the report rated as “high concern”, 58% rated as “average concern”, and 19% rated as “low concern”.
Some takeaways of the report include:
- Scores ranged from a high of 100 to a low of 12.5.
- The median score was 50 (out of 100), while the average was 49.
- Companies with the lowest Scorecard score had the lowest average yes votes on Say on Pay; only an average of 73 percent – widely considered to be a poor result – supported Say on Pay resolutions at companies with a Scorecard score lower than 20.
- More than a fifth of companies with a “high concern” (scoring less than 40 points) received a negative Say on Pay vote, higher than 30 percent votes against.
- 265 companies in the S&P 500 rate an “average concern”, 89 rate a “low concern”, and 102 a “high concern”.
The report analyzes data from proxy statements filed between January and July 2011 as well as voting results on “Say on Pay” as reported by companies by July 2011. The report’s scores use a 1 to 100 scale with graded and differently weighted metrics leading to an absolute score for each company. A “high concern” company scores 40 points or less, while a “low concern” company scores 60 or more.
GMI’s Executive Pay Scorecards are designed to better inform investors about “Say on Pay” votes. This vote was established by the Dodd-Frank Act as a compulsory practice for all but the smallest U.S. companies. The Scorecards assess the quality of compensation policy and practices by evaluating proxy season filings against 10 metrics, including pay ratio, annual cash incentives, bonuses, equity compensation, incentives vs. performance, and potential cash severance, among others.
The ten worst scoring companies in the report include:
- Abercrombie & Fitch Co.
- Moody’s Corporation
- Aetna Inc.
- Nabors Industries Ltd.
- Medtronic, Inc.
- Zimmer Holdings, Inc.
- Prudential Financial, Inc.
- Constellation Brands, Inc.
- Teradyne, Inc.
- Yahoo! Inc.
For more information about GMI, please contact GMI at 212-949-1313 or email@example.com