If there’s one new thing you are looking to do to upgrade your CD&A narrative for this year, consider telling a more robust story about your organization’s shareholder engagement process. Over the last few years, we’ve seen a sizeable shift in readers’ expectations when it comes to understanding what steps companies have taken to listen to their shareholders about executive compensation matters, regardless of the previous year’s say-on-pay results.
Of course, ISS and Glass Lewis have also added weight to the importance of being transparent about shareholder outreach. Historically, if you found your company with a say-on-pay result with support lower than 70%, ISS said you had some explaining to do. In the fall of 2019, Glass Lewis took it a step further: for companies that receive shareholder support lower than 80%, not only should you provide a substantive description of your engagement with shareholders, but you should describe any changes that were made to those address concerns. The level of detail should be tailored to voting results. In other words, the higher the “Against” vote, the more robust shareholder engagement detail should be.
Of course, the way in which your company tells this part of the shareholder engagement and board responsiveness story should be reflective of its unique situation. However, for companies that failed say-on-pay or are in the 70% - 80% range, there are simple yet key pieces of content that should be considered when developing your narrative.

But even if you received more than 80% support for your program, don’t shy away from including a sentence or two about your engagement process and/or positive themes you’ve heard from your investors along the way. Shareholders should have confidence that the board is always open to feedback on compensation matters—especially given heightened sensitivities around environmental, social, and governance issues, including gender pay equity. Reinforcing that the board has a disciplined process for staying connected with investors and implementing changes when needed can help bolster support in the long run.