Shareholder Engagement Responses to Adverse Sayon-Pay Votes

Shareholder Engagement Responses to Adverse Say-on-Pay Votes

This is our third annual report on how companies with adverse say-on-pay votes responded with shareholder engagement programs the following season to address shareholder concerns.  Our report on the 2023-2024 season is available here, and for the 2024-2025 here.

Background

SEC rules require that public companies hold a separate shareholder advisory vote to approve the compensation of executives. This covers compensation disclosed per S-K Item 402 including CD&A, the compensation tables, and other narrative executive compensation disclosures.

Most years for most companies this vote passes with greater than 80% support from those shareholders who vote on the matter. But sometimes for some companies the approval rate is less than 80%. Sometimes the resolution receives less than a majority and fails to pass at all.

These adverse outcomes are typically driven by an adverse voting recommendation from one or more of ISS, Glass Lewis and large institutional investors for violating their voting policies for executive compensation. While SEC rules only require a non-binding advisory vote, in practice these entities provide an enforcement mechanism.

Companies that have received an adverse say-on-pay vote nearly always respond with a shareholder engagement program during the following season. Further below, we provide details on the engagement programs that were used this season.

Methodology

With a view to reviewing how companies responded to adverse say-on-pay votes:

• We reviewed say-on-pay voting results for Fortune 1000 companies during the 2025–2026 annual meeting season and identified 14 companies where support was below 80%, compared with 25 companies in 2024–2025 and 21 companies in 2023–2024.
• For these companies we then reviewed their shareholder engagement program as summarized in their 2026 AGM proxy statement. Nearly all of the 14 had an announced program, some more detailed than others
• Subsequently, all 14 had an improved say-on-pay vote at their 2026 AGM, with increases ranging from 3.9% to 66.1%

Results for the Fortune 1000

Note: The voting results were calculated based on “for” and “against” votes. Sources: Fortune, SEC.gov and DragonGC Analysis

1. Engagement Strategy

Broad and Direct Engagement

PENN Entertainment, UnitedHealth Group and GE Aerospace conducted extensive shareholder outreach following lower say-on-pay support, targeting significant portions of their shareholder bases and involving independent directors in the process. PENN invited 17 shareholders representing approximately 48% of outstanding shares and met with nine shareholders representing approximately 36%; independent Board members attended 100% of the engagement meetings held with investors among the company’s top 30 holders. UnitedHealth contacted 46 shareholders representing approximately 60% of outstanding shares and held discussions with 21 shareholders representing approximately 51%, including all 12 shareholders identified as having voted against the say-on-pay proposal; independent directors participated in every discussion. GE Aerospace reached out to shareholders representing approximately 54% of total outstanding shares and engaged with shareholders representing approximately 48% of outstanding shares, with independent directors directly engaging with holders representing approximately 29% of outstanding shares. The Compensation Committee Chair at the time also led or participated in many of those meetings, based on shareholder preferences. Collectively, these efforts reflect broad, Board-involved outreach intended to identify compensation-related concerns and inform Board and compensation committee consideration of responsive actions.

Structured and Recurring Engagement

Intel, Goldman Sachs and Live Nation Entertainment used ongoing or multi-stage engagement processes rather than relying on a single post-vote outreach effort. Intel maintained a year-round engagement cycle that included reviewing annual-meeting results, conducting off-season outreach, incorporating feedback and holding in-season discussions. Goldman Sachs began executive-compensation and governance engagement before the 2025 Annual Meeting and continued the process afterward, ultimately holding more than 120 meetings with representatives of shareholders owning more than 45% of outstanding shares. Live Nation engaged stockholders before and after the 2025 Annual Meeting, contacted approximately 20 stockholders specifically regarding its compensation program and say-on-pay matters, held meetings with stockholders representing well over 50% of outstanding shares and implemented a more proactive engagement plan to promote ongoing dialogue with management and the Board. These recurring programs gave shareholders multiple opportunities to provide feedback and enabled the companies to consider investor perspectives in compensation-related deliberations throughout the year.

Targeted and Topic-Specific Outreach

Landstar System, Otis Worldwide and O-I Glass structured their engagement around specific compensation concerns identified through the say-on-pay process. Landstar met with top stockholders and proxy advisers to discuss the CEO’s sign-on equity award, vesting and performance conditions, the CEO transition process, short-term incentive-plan design and related compensation disclosures. Otis discussed off-cycle equity awards, PSU design, the short-term incentive program and succession planning and reported that the principal concern underlying the vote was the 2024 off-cycle awards. Otis also reported that investors did not express material concerns regarding its annual PSU program and welcomed its proposal to enhance accountability through future PSU awards. O-I Glass invited its 15 largest shareholders, representing approximately 67% of outstanding shares, to discuss its executive compensation program and ultimately engaged with holders representing approximately 44%. The Independent Board Chair and Compensation and Talent Development Committee Chair participated in meetings with shareholders representing approximately 31% of outstanding shares. Through this outreach, the company determined that opposition primarily concerned payments made to its former CEO under legacy life-insurance, pension and retirement arrangements rather than the design of the ongoing compensation program. These examples show how focused outreach can identify key concerns and guide targeted responses.

2. Response to Feedback on Executive Compensation

Pay Reductions and Lower Award Opportunities

PENN Entertainment, Tutor Perini and Western Union reduced or constrained executive compensation following shareholder concerns regarding pay magnitude and award levels. PENN reduced the CEO’s 2026 target equity award value by $7.87 million, representing a 41% reduction in long-term incentive opportunity, reduced the CEO’s total target direct compensation by 31% compared with 2025 and approved no target-compensation increases for the other named executive officers. Tutor Perini reduced the Executive Chairman’s target annual compensation by 37% in 2025 compared with his compensation when he last served as CEO, provided for an additional 8% reduction in 2026 and positioned the new CEO’s 2025 compensation below the median of the company’s peer group. Western Union approved no above-target or one-time CEO awards in 2025, made or anticipated no similar award for 2026 and exercised negative discretion to reduce the CEO’s 2025 annual incentive payout by an additional 30%. These actions demonstrate direct responses to shareholder concerns through lower target compensation, reduced equity opportunities, the elimination of supplemental awards and downward adjustments to incentive payouts.

Restrictions on Special, One-Time and Front-Loaded Awards

UnitedHealth Group, Otis Worldwide and Western Union adopted policies or announced commitments limiting the use of exceptional executive awards. UnitedHealth adopted a policy not to grant front-loaded awards except in extraordinary circumstances that it does not currently foresee and confirmed that stock awards comprising executives’ annual target compensation opportunities would continue to be granted annually under its regular process. Otis committed not to grant future off-cycle equity awards to its incumbent CEO and stated that off-cycle awards to other executive officers would be granted only in rare and exceptional circumstances. Western Union stated that no compensation similar to the CEO’s 2024 above-target grant was awarded in 2025 or 2026 and committed to avoid similar compensation in the future barring extraordinary circumstances. These commitments limit the future use of large, episodic awards and reinforce a preference for compensation delivered through regular annual programs.

3. Incentive Plan and Equity Structure

Incentive Plan and Performance-Metric Redesign

L3Harris Technologies, Landstar System and Salesforce revised the mechanics of their annual and long-term incentive programs to strengthen pay-for-performance alignment. L3Harris revised the relative-TSR payout structure for its 2026–2028 long-term incentive plan by setting threshold and maximum payout levels at the 25th and 75th percentiles, respectively, removed the Strategic Goals metric from its annual cash-incentive program and focused performance measurement on Free Cash Flow, EBIT, Revenue and Segment Operating Margin. Landstar changed its fiscal 2026 annual cash-incentive measure from diluted earnings per share to operating income, established a threshold under which no annual cash-incentive funding or payout would occur if operating income fell more than 5% below budget and changed the performance measure for its 2026 performance-based RSUs to diluted earnings per share. Salesforce redesigned its fiscal 2026 annual bonus program around equally weighted subscription and support revenue and non-GAAP income from operations metrics, subject to a strategic modifier, and introduced performance-based stock options tied to Agentforce and Data 360 annual recurring revenue and a new Margin & Growth metric for its PRSUs. These revisions illustrate how companies can refine performance measures, restructure incentive mechanics and more closely connect executive rewards to financial results, strategic execution and shareholder value.

Increased Performance-Based Pay and Equity Alignment

Salesforce, PENN Entertainment and Live Nation Entertainment strengthened the connection between executive compensation and measurable performance. Salesforce introduced performance-based stock options for all named executive officers tied to Agentforce and Data 360 annual recurring revenue, added a Margin & Growth component to its performance-based RSUs and made the CEO’s fiscal 2026 long-term equity award entirely performance-based; 50% of the equity mix for the other named executive officers was performance-based. PENN redesigned its 2026–2028 PSU program around cash flow from operations, subject to a relative-TSR modifier of up to 20% in either direction, and added a safeguard preventing an upward modifier when absolute TSR is negative. Live Nation adopted a policy prohibiting cash bonuses for executive officers without performance requirements, committed not to use identical or overlapping metrics across its short- and long-term incentive programs and required stock-price conditions applicable to performance awards to be satisfied over consecutive days. These changes strengthened pay for-performance alignment by tying compensation more directly to financial results, strategic execution and shareholder returns.

4. Governance and Policy Reforms

Stronger Compensation Governance and Risk Controls

Tutor Perini, UnitedHealth Group and Live Nation Entertainment adopted or announced safeguards intended to strengthen compensation accountability and reduce the risk of inappropriate outcomes. Tutor Perini stated that it plans to avoid guaranteed cash bonuses and accelerated vesting of equity awards following voluntary terminations. The company entered into new employment letters with two business-segment leaders, replacing legacy agreements containing commitments to pay additional annual cash bonuses. It has granted or will grant restricted-stock-unit awards in 2025 and 2027 that each vest over three years based on continued employment and are intended to replace those cash bonuses. Tutor Perini also stated that it no longer intends to grant cash-settled long-term incentive awards to its named executive officers. UnitedHealth increased the CEO stock-ownership requirement from eight to ten times base salary and required that net shares acquired through the CEO’s one-time stock-option award not be sold before May 2030, five years after the grant date. Live Nation adopted a policy under which no cash bonus awards will be made to executive officers without performance requirements, identical or overlapping performance metrics will not be used across short- and long-term incentive programs and consecutive days of attainment will be required for awards with stock-price performance conditions. The Compensation Committee currently uses a 30-consecutive-day period and stated that it will not use a period of fewer than 20 consecutive days. These measures and stated commitments strengthened compensation accountability through clearer performance conditions, longer-term equity alignment and limitations on guaranteed, duplicative or accelerated compensation outcomes.

Compensation Committee, Board and Adviser Enhancements

PENN Entertainment, Landstar System and Salesforce strengthened or used formal governance processes to review and administer executive compensation. PENN appointed a new Compensation Committee Chair, added two members to the committee, conducted a comprehensive RFP process and retained Semler Brossy as its new independent compensation consultant. With Semler Brossy’s assistance, the committee conducted an in-depth assessment of the executive compensation program against peer practices and investor expectations. Landstar engaged FW Cook after the 2025 Annual Meeting to review the company’s short- and long-term executive incentive-plan designs, with the Compensation Committee Chair participating in all shareholder and proxy-adviser meetings. Salesforce’s Compensation Committee worked with independent compensation consultant Semler Brossy to evaluate shareholder feedback and develop compensation-program enhancements. Semler Brossy also advised on incentive design and metrics, market and peer practices, compensation governance and say-on-pay matters. These examples show how companies can strengthen compensation oversight through refreshed committee leadership, independent advice and more formal review and decision-making processes.

5. Enhanced Transparency and Disclosure Improvements

Detailed Compensation Reporting and Proxy Enhancements

Goldman Sachs, L3Harris Technologies and Western Union expanded their proxy disclosures to provide shareholders with clearer explanations of compensation arrangements, performance standards and committee decision-making. Goldman Sachs provided additional explanation regarding the rationale and structure of its Carried Interest Program and Retention RSUs, including their purpose, vesting and retention features and intended alignment with long-term shareholder value. L3Harris expanded its disclosure concerning the Compensation Committee’s rationale for compensation decisions, the process used to establish compensation levels, the composition and purpose of its peer groups, the rigor of annual- and long-term-incentive targets, retrospective disclosure of performance targets and the historical use of discretionary adjustments. Western Union redesigned its Compensation Discussion and Analysis to explain the relationship between shareholder returns and realized executive compensation and added business context, explanations of Compensation Committee decisions and a scorecard showing performance against incentive targets. These enhancements demonstrate how clearer and more decision-useful disclosure can form an important part of a company’s response when shareholders question pay-for-performance alignment or the rationale for compensation outcomes.

6. Retention of Core Compensation Programs

No Substantive or Minimal Program Changes

Goldman Sachs, Simon Property Group and GE Aerospace generally retained their existing compensation frameworks rather than undertaking broad program redesigns. Goldman Sachs determined, after considering shareholder feedback and approximately 66% say-on-pay support, that changes to its executive compensation program were not warranted and instead provided additional explanation regarding the Carried Interest Program and Retention RSUs. Simon Property Group concluded that the 2025 vote reflected a discrete concern regarding the relative magnitude of a single transaction-based award rather than a rejection of the overall compensation program and retained its established program mechanics while committing to carefully calibrate future transaction-based awards. GE Aerospace reported that, among the shareholders it met with who voted against say-on-pay, the predominant reason for those votes was a preference against off-cycle equity grants such as the CEO Incentive Grant that was part of the new agreement with Mr. Culp. GE Aerospace maintained the core compensation framework, held the CEO’s 2025 total target compensation flat and stated that it did not anticipate additional grants to the CEO outside the annual process during his current employment agreement. These examples demonstrate that companies may respond to discrete compensation concerns through targeted limitations, continued engagement and enhanced explanation rather than a wholesale restructuring of the compensation program.