The Power of a No Vote on Pay, and a Disney Mystery

Votes against pay packages have inspired responses that address problematic practices, but this year I’m seeing some indications they might cause boards to address quantum as well.

After Patterson-Uti received a negative vote on pay – support was only 24.5% -- Executive Chairman Mark Siegel wrote to compensation chair Terry Hunt in November “to request an immediate, substantial decrease in my compensation.” Specifically, Siegel asked for a 50% reduction in salary, bonus opportunity and long-term incentive compensation.

Siegel, who details in the letter his history and accomplishments at the company writes that, “My concern for the reputation of the Company, as well as for my reputation, compels me to request this immediate change in my compensation. Irrespective of my contributions, I don't want my compensation ever to be a factor in any future ‘say-on-pay’ vote.”

“I am making this request today not because I think what we had done in the past was wrong,” Siegel writes, “but rather because it is the right thing to do today in light of all that has occurred.”

The letter also specifically addresses the issue of whether compensation as motivating factor: “While my compensation will be reduced, you have my commitment that I will continue to work just as hard as I have during the past twenty-three plus years - with total dedication to the Company's long-term success.”


Another case of a reduction in pay came at Disney in March when Robert Iger agreed to a reduction of salary and guaranteed bonus of $13.5 million just days before the company’s annual meeting on March. Last year 54.5% of shareholders voted against the package.

When I saw the contract I immediately wondered whether the change was made to persuade one or more large shareholders to move from a vote against to a vote in support of pay. It isn’t unusual at all for a company to make changes follow a bad vote, and Disney had already amended the contract to address such issues as treatment of performance shares. And this was quite late in the game. Both ISS and Glass Lewis had issued recommendations against the package and most votes were in.

On March 7, when I learned that vote support for pay was 58% it underlined my speculation that there were shareholders whose votes were in play until the last minute. We won’t get more information on the Disney votes till the NP-Xs are filed, and of course even then we won’t have a definitive answer. I’ll be particularly curious to see whether any of the ten largest holders of Disney that voted against pay or abstained last year switched their votes. Those funds are: Vanguard, SSgA, BNYMellon, Morgan Stanley, or Geode.

In any case the level of opposition still “shows tremendous dissatisfaction on the part of shareholders." Of the 78 shareholders that release their data pre-NPX, and that Proxy Insight is tracking, 69 voted against the pay package. The size of the Iger’s award was unchanged and many shareholders continue to be alarmed at the size of the CEO pay package at Disney.  

Rosanna Weaver