Board Governance: Preparing For Next Proxy Season

Proxy season went well for the majority of boards, says Virginia Rhodes, lead consultant at Meridian Compensation Partners.

Rhodes sat down with Corporate Board Member editor-in-chief Dan Bigman as part of the Board Governance Series to talk about the most recent proxy season and how boards can prepare for the next one. “Director elections have gone with very limited opposition, shareholder proposals on the compensation side very limited minority support, and for ‘say on pay’…[most] S&P500 companies have gotten 90 percent support on ‘say on pay,’” says Rhodes.

Rhodes does not though that there were seven companies that failed their “say on pay” votes. “Those companies have certainly had bigger issues to deal with than more than most,” she says.

In reviewing the most recent proxy season, Rhodes says CEO pay ratio was a popular topic of conversation among boards. The topic delved into median employee pay vs. the CEO pay ratio itself. “It became a discussion about…how do you message this [pay ratio] internally [to employees]?”

Later in the interview, Rhodes offers a few tips on how boards can prepare for the next proxy season as they enter the offseason.

1) Engage shareholders. Rhodes says companies are not doing this as much as they should. “Start with your large shareholders, request in-person meetings,” she says. “Send letters to the smaller ones, start telling your story.”

2) Listen. When your shareholders talk, listen, advises Rhodes. Once the board does that, they should put it in their proxy. “Here’s what we heard, here’s what we did.”

3) Start preparing now. As they get ready for the 2019 proxy season, boards need to start their preparations right now, says Rhodes.

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