Hunton Retail Law Resource

As the 2018 proxy season is winding down, some trends have begun to emerge regarding CEO pay ratio disclosure, shareholder proposals and virtual shareholder meetings.

CEO Pay Ratio Disclosure

This is the first year in which companies are required to provide CEO pay ratio disclosure, and the results have varied wildly, with reported pay ratios ranging from 0:1 to 5,908:1. As anticipated, due to SEC rules prohibiting companies from annualizing part-time worker compensation, retailers and other companies in industries with a large number of part-time and temporary workers have generally reported higher CEO pay ratios. On the other hand, there are a select few cases in which companies have reported unusually small pay ratios, such as Alphabet Inc.’s pay ratio of 0.000005:1, in instances where the CEO received nominal compensation despite having significant stock holdings. These results continue to raise concerns about the usefulness of such disclosures and the difficulty with comparing between individual companies and across industries. Despite being able to provide supplemental disclosure to provide additional context, most companies have opted to not include supplemental pay ratios.

Shareholder Proposals

According to ISS Analytics, shareholder proposals related to social issues were the most popular among filed proposals, with governance and climate change as the second and third most popular categories, respectively. The five most popular types of shareholder proposals filed were those concerning the right to call a special meeting, lobbying disclosure, an independent board chair, carbon emissions and political contributions disclosure.

Virtual Shareholder Meetings

More companies are choosing to hold virtual shareholder meetings instead of traditional in-person meetings. The number of virtual meetings held from January to May 2018 represented a year-over-year increase of 28 percent compared to the same period in 2017. Although virtual meetings are controversial, with critics citing factors such as less transparency, their popularity is expected to keep growing as companies find the cost savings and other benefits to be compelling.