A new research paper has been released that looks at the influence of proxy advisors in the 2011 Say on Pay votes.  The paper, Shareholder Votes and Proxy Advisors: Evidence from Say on Pay, by Yonca Ertimur (Duke University), Fabrizio Ferri (Columbia University), and David Oesch (University of St. Gallen), reviewed the 1,275 proxy reports issued by ISS and Glass Lewis with respect to the S&P 1500 firms in 2011. The authors found that ISS issued Against vote  recommendations at 11.3% of the firms and Glass Lewis did so for 21.7% of the firms.

The researchers found that a negative vote recommendation from ISS (Glass Lewis) on SOP was associated with 24.7% (12.9% for Glass Lewis) more votes against the proposal. Researchers found that when both ISS and Glass Lewis recommended an against vote on SOP, the dissent was higher by 37.9%.

Researchers found that investors do not appear to mechanically follow the proxy advisors’ vote recommendations. Instead, investors appear to use the information in the proxy advisors’ reports to decide which SOP recommendations to support.

Researchers also found that 36% (52 of 144) of the firms with a negative SOP vote recommendation from ISS reacted by filing additional documents with the SEC before their annual meetings. 40 firms voiced their disagreement with the ISS rationale for its recommendation; researchers found that such tactics did not lead to either a change in ISS’s vote recommendation nor in lower voting dissent. Eight firms changed the compensation provision criticized by ISS, causing ISS to revise its vote recommendation and resulting in lower voting dissent. The other four firms provided additional disclosure (and obtained a revised, favorable recommendation in 2 cases).

The research paper also looks at the SOP frequency vote recommendations, as well as vote results, the proxy advisors’ analysis of company compensation plans/programs, and the way shareholder votes responded to the vote recommendations of the proxy advisors.

The full research paper can be found at SSRN at:


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