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1

• The failure rate (2.7%) was 10 basis points higher than

last year, and was the highest observed since 2015

• The average vote result (90.5%) was 30 basis points

higher than the average vote result last year and the

third lowest since voting began in 2011

• One-third of the S&P 500 has received vote support

below 70% at least once since 2011

• 10% of the Russell 3000 and 8% of the S&P 500

constituents have failed Say on Pay at least once over

the same period

Sixty Russell 3000 companies (2.7%) failed Say on Pay in 2019. Four companies failed since our last report in September– Accuray,

American Outdoor Brands, Aspen Technology, and Palo Alto Networks.

8%

33%

68%

10%

28%

58%

Below 50% Support at Least Once

Below 70% Support at Least Once

Below 90% Support at Least Once

Vote results for current S&P 500 and Russell 3000 constituents since 2011

S&P 500 Russell 3000

72% 73% 76% 75% 76% 75% 78% 75% 76%

21% 19% 15% 17% 16% 17% 15% 16% 15%

6% 6% 6% 6% 6% 6% 5% 6% 6%

1.4% 2.6% 2.5% 2.4% 2.8% 1.7% 1.5% 2.6% 2.7%

0%

25%

50%

75%

100%

2011Avg= 90.9%

n=2,660Failures=37

201289.8%2,226

57

201390.6%2,253

57

201490.9%2,545

60

201590.8%2,157

61

201690.9%2,117

35

201791.7%2,357

35

201890.2%2,154

57

201990.5%2,237

60

Below 50%

50 - 70%

70 - 90%

90%+

PERCENTAPPROVAL

2Source: Semler Brossy data and analysis; ISS Voting Analytics. Russell 3000 sample effective as of June 26, 2018.

• The average Say on Pay vote result for companies that

received an ISS “Against” recommendation was 30

percentage points lower than for companies that received

an ISS “For” recommendation

• The 30-percentage point gap is equal to the gap observed

last year and is near the high end of the historical average

range of 24 to 32 percentage points observed since 2011

• The larger gaps observed last year, and this year could

indicate an increase in proxy advisors’ influence on

shareholder voting

• 305 companies (15.6%) received one “For” and one

“Against” recommendation from ISS during the last two

years

• 63% of companies that got an “Against” recommendation

in 2018 were able to get a “For” recommendation in 2019

• Only 4.7% of companies received consecutive “Against”

recommendations in the last two years

• The “Against” recommendation rate in 2019 (12.7%) was

120 basis points lower than the 2018 rate (13.9%); and

was in-line with the historical average observed since 2011

(12.8%)

For Against

For 79.7% 7.5%

Against 8.1% 4.7%

2019

2018

85% 82% 81% 81% 78% 75% 75% 74% 71% 70% 69%

11% 12% 12% 15% 14% 16% 14% 15% 22% 18%

13%

3% 4% 6% 3% 5% 8% 9% 7% 6% 6%

8%

2% 2% 1% 2% 3% 1% 2% 3% 1% 6% 10%

0%

25%

50%

75%

100%

Utilities

Avg. = 92.7%

n = 66

Industrials

92.0%

336

Financials

91.5%

429

Materials

92.1%

115

Consumer

Staples

91.3%

79

Real Estate

90.0%

153

Energy

89.8%

118

Health Care

89.3%

307

Consumer

Discretionary

90.7%

282

Information

Technology

87.8%

290

Comm.

Services

87.5%

62

90%+ 70 - 90% 50 - 70% Below 50%

94%

64%

0%

25%

50%

75%

100%

ISS For(n = 1,954)

ISS Against(n = 283)

2011 2019

3

2019 Failed Say on Pay Vote Results1

Russell 3000, n=60 Likely Causes of Votes Under 50%

Number Pay and Problematic Rigor of Shareholder Non- Special

Say on Pay Vote Results of Performance Pay Performance Outreach and Performance Awards/ Mega- Benchmarking

Company 2019 q 2018 YOY Failures Relation Practices Goals Disclosure Based Equity Grants Practices

Avaya Holdings Corp. 50% - - 1 X X X

Netflix, Inc. 50% 61% -11% 1 X X X

Tribune Media Company 49% 56% -6% 1 X X

Vector Group Ltd. 49% 51% -2% 1 X X X X X

Nexstar Media Group, Inc. 49% 39% 9% 2 X X

HC2 Holdings, Inc. 49% 82% -33% 1 X X X X

FuelCell Energy, Inc. 48% 66% -17% 1 X X X X

Applied Optoelectronics, Inc. 48% 90% -42% 1 X X X X

Digimarc Corporation 47% 42% 5% 2 X X X X

Tyler Technologies, Inc. 47% 76% -29% 1 X X X

Nabors Industries Ltd. 47% 41% 7% 8 X X X

QEP Resources, Inc. 47% 85% -38% 1 X X X

Nuance Communications, Inc. 47% 10% 37% 6 X X X X

Diebold Nixdorf, Incorporated 46% 90% -44% 1 X X

The Middleby Corporation 46% 85% -39% 2 X X X X

TG Therapeutics, Inc. 46% - - 1 X X X

LendingClub Corporation 46% 95% -49% 1 X X X

Willdan Group, Inc. 46% - - 1 X X

South Jersey Industries, Inc. 45% 98% -53% 1 X X

Citizens, Inc. 44% 99% -55% 1 X

The Boston Beer Company, Inc. 44% 82% -38% 1 X X X

Ennis, Inc. 44% 52% -8% 1 X X X X X

Frontier Communications Corporation 44% 83% -39% 1 X X X

iStar Inc. 43% 40% 3% 2 X X

Southern National Bancorp of Virginia, Inc. 43% 73% -30% 1 X X X

Align Technology, Inc. 42% 95% -53% 1 X X

SS&C Technologies Holdings, Inc. 42% 66% -24% 1 X X X X

PTC Inc. 42% 93% -51% 1 X X XCenturyLink, Inc. 41% 79% -39% 1 X X XMcKesson Corporation 40% 87% -46% 3 X X X X

Motorcar Parts of America, Inc. 40% 76% -36% 2 X X X

Xerox Holdings Corporation 40% 64% -24% 1 X X X X

Vista Outdoor Inc. 40% 50% -9% 2 X X X

Williams-Sonoma, Inc. 40% 83% -43% 1 X X

Rayonier Advanced Materials Inc. 40% 81% -41% 1 X X X X

IMAX Corporation 39% 43% -4% 3 X X X X

2U, Inc. 38% 95% -57% 1 X X X

Signature Bank 38% 65% -27% 1 X X X X

Xperi Corporation 38% 74% -36% 1 X X X

American Outdoor Brands Corporation 37% 95% -58% 1 X X

Tutor Perini Corporation 37% 38% -1% 9 X X X X

Mallinckrodt plc 37% 59% -22% 1 X X X X

NCR Corporation 36% 97% -60% 1 X X X

ASGN Incorporated 36% 91% -55% 1 X X X

ServiceSource International, Inc. 35% 52% -17% 1 X X X X

Alkermes plc 35% 98% -63% 1 X X XAspen Technology, Inc. 34% 68% -34% 1 X X XAmeriprise Financial, Inc. 34% 25% 9% 2 X XVaronis Systems, Inc. 33% 94% -60% 1 X X XAGCO Corporation 33% 94% -61% 1 X X X X XPuma Biotechnology, Inc. 27% 79% -52% 1 X X XUnited Therapeutics Corporation 27% 74% -48% 3 X X XFleetCor Technologies, Inc. 26% 14% 11% 4 X X X X XNewmont Corporation 24% 52% -28% 1 X XProofpoint, Inc. 18% - - 1 X X X XPalo Alto Networks, Inc. 18% 21% -3% 4 X X X XKilroy Realty Corporation 15% 59% -44% 4 X X X XMEDNAX, Inc. 13% 74% -61% 1 X X XAccuray Incorporated 11% 88% -77% 2 X X X XImmunoGen, Inc. 10% 91% -82% 1 X X X

Count (n=60) 42 41 24 17 30 19 3

1 As of December 31, 2019

4

• The median CEO Pay Ratio of the S&P 500 was 2.2x the median CEO Pay Ratio of the Russell 3000, which was slightly lower than the

2.3x multiple we observed between the two indices last year

• The range of median employee compensation for the S&P 500 was slightly higher than the Russell 3000, except at the 90th

percentile, where the Russell 3000 was 8% higher

• The Russell 3000 CEO Pay Ratio distribution trailed off near 300:1 while the S&P 500 distribution trailed off near 500:1

• The distribution of CEO Pay Ratios is most highly concentrated near 60:1 for the Russell 3000 and near 120:1 for the S&P 500

76x108x

173x

301x

532x

19x 39x79x

166x

343x

0x

100x

200x

300x

400x

500x

600x

10 P 25 P 50 P 75 P 90 P

S&P 500

(n=448)

Russell 3000

(n=2,138)

$26

$47

$68

$104

$138

$24$44

$64

$98

$150

$0

$30

$60

$90

$120

$150

$180

10 P 25 P 50 P 75 P 90 P

Tho

usa

nd

s

S&P 500

(n=448)

Russell 3000

(n=2,138)

Russell 3000

50th P: 79x75th P: 166x

S&P 500

50th P: 173x75th P: 301x 90th P: 532x

90th P: 343x

0%

5%

10%

15%

20%

25%

0x 100x 200x 300x 400x 500x 600x 700x 800x

Per

cen

tage

of C

om

pan

ies

CEO Pay Ratio

S&P 500

Russell 3000

5Source: Semler Brossy data and analysis; ISS Voting Analytics. Russell 3000 sample effective as of June 26, 2018.

No Alt. Ratio Disclosure: 90%

Disclosed Alt. Ratio: 10%

• 10% of companies disclosed an alternate Pay Ratio

• Companies most frequently disclosed alternate Pay Ratios

to illustrate the impact of: (1) excluding one-time awards for

the CEO; (2) using only U.S. employees; or (3) using only full-

time or corporate employees

• The range of CEO Pay Ratios for the Russell 3000 was slightly

wider than the range observed last year

• The median change in Summary Compensation Table CEO

pay by company in the Russell 3000 was +6% and in the S&P

500 was +4%; the median change in median employee

compensation by company in both indices was +3%

16x 34x73x

151x

324x

19x 39x79x

166x

343x

0x

100x

200x

300x

400x

500x

600x

10 P 25 P 50 P 75 P 90 P

2018

(n=2,101)

2019

(n=2,138)

76x114x

166x

302x

542x

76x 108x173x

301x

532x

0x

100x

200x

300x

400x

500x

600x

10 P 25 P 50 P 75 P 90 P

2018

(n=439)

2019

(n=448)

Lower Alt. Ratio (n=178)

Higher Alt. Ratio (n=28)

CEO CEO Median Emp.

Percentile Pay Ratio Comp. Comp.

90 P +54% +60% +16%

75 P +17% +19% +8%

Median +2% +4% +3%

25 P -13% -8% -2%

10 P -31% -28% -11%

CEO CEO Median Emp.

Percentile Pay Ratio Comp. Comp.

90 P +67% +80% +21%

75 P +24% +28% +10%

Median +2% +6% +3%

25 P -13% -9% -2%

10 P -33% -31% -12%

6Source: Semler Brossy data and analysis; ISS Voting Analytics. Russell 3000 sample effective as of June 26, 2018.

• CEO Pay Ratios in the Utilities and Energy sectors were within a tight range between the 25th and 75th percentiles

• Highly paid CEOs in the Communication Services and Information Technology sectors lead to higher CEO Pay Ratios at the 90th

percentile

• The composition of a company’s workforce and the use of seasonal or part-time employees in the Consumer Staples and Consumer

Discretionary sectors drove the high CEO Pay Ratios at the 75th and 90th percentiles

1,555:1

25P

Median

75P

10P

90P Legend

25P

Median

75P

10P

90P Legend

46x 53x 53x 60x 61x83x 87x 92x 96x

167x206x

0x

100x

200x

300x

400x

500x

600x

700x

800x

900x

1000x

Financials

n=373

Health Care

n=275

Utilities

n=63

Real Estate

n=151

Energy

n=119

Materials

n=119

Information

Technology

n=264

Industrials

n=329

Comm.

Services

n=79

Consumer

Staples

n=86

Consumer

Discretionary

n=280

157x193x

91x116x 108x

178x 170x 184x 188x

313x

459x

0x

100x

200x

300x

400x

500x

600x

700x

800x

900x

1000x

Financials

n=62

Health Care

n=56

Utilities

n=28

Real Estate

n=32

Energy

n=26

Materials

n=23

Information

Technology

n=49

Industrials

n=63

Comm.

Services

n=16

Consumer

Staples

n=30

Consumer

Discretionary

n=63

7Source: Semler Brossy data and analysis; ISS Voting Analytics. Russell 3000 sample effective as of June 26, 2018.

• The CEO Pay Ratio has an inverse

relationship with Say on Pay but is not a

primary driver of Say on Pay results

• 24% of Russell 3000 companies had a Pay

Ratio above 175:1, but accounted for 44% of

Say on Pay vote failures; 31% of S&P 500

companies had a Pay Ratio above 260x, but

accounted for 67% of all Say on Pay failures

• Companies with top quartile CEO Pay Ratios

(Russell 3000 above 150x and S&P 500 above

300x) were almost twice as likely to receive

Say on Pay vote support below 90%

< 50x32%

50x - 100x25%

100x - 175x18%

> 175x24%

All Companies(n=1,918)

< 50x13%

50x - 100x22%

100x - 175x20%

> 175x44%

Failed Say onPay (n=54)

92.3% 92.2% 90.7% 87.9%

15.0%17.4% 18.4%

29.0%

Ratio < 40x

n = 479

40x - 75x

n = 411

75x - 150x

n = 472

> 150x

n = 556

Avg SOP Vote Companies with SOP < 90%

92.9% 90.8% 90.4% 87.7%

9.6%

21.4%17.7%

34.5%

Ratio < 100xn = 89

100x - 165xn = 113

165x - 300xn = 117

> 300xn = 110

Avg SOP Vote Companies with SOP < 90%

10%

8%

12%

17%

Ratio < 40xn = 479

40x - 75xn = 411

75x - 150xn = 472

Ratio > 150xn = 556

8%

11%

8%

16%

Ratio < 100xn = 89

100x - 165xn = 113

165x - 300xn = 117

Ratio > 300xn = 110

8

• Average vote support for equity proposals (88.3%) was equal to the average vote support observed last year

• The number of equity proposals in 2019 (565) and 2018 (558) were the two lowest numbers of proposals since 2011 - we suspect

this decrease over the last two years was largely attributable to the elimination of the 162(m) provision that required shareholder

approval of performance goals in incentive plans every five years, and we expect this will likely continue going forward

• Companies that received Say on Pay support below 70% received five percentage points lower support on equity proposals than

companies that received Say on Pay support above 90%

34%48% 52% 55%

65% 61% 65% 60% 63%

52%

43% 38% 37%30%

31% 28% 32% 27%

13% 8% 9% 8% 6% 8% 7% 8% 9%

0.5% 0.4% 0.6% 0.6% 0.1% 0.6% 0.6% 0.4% 0.4%

0%

25%

50%

75%

100%

2011Avg. = 83.2%

n = 632

Failures = 3

201286.3%

689

3

201386.9%

781

5

201487.6%

805

5

201589.5%

786

1

201688.2%

785

5

201789.3%

829

5

201888.3%

558

2

201988.3%

565

2

Below 50%

50 - 70%

70 - 90%

90%+

PERCENT

APPROVAL

90% 92% 90% 92% 91% 90%83%

87% 88% 85% 85% 86%79%

83% 83% 83% 80%85%

0%

20%

40%

60%

80%

100%

2014n = 684

2015n = 607

2016n = 566

2017n = 678

2018n = 419

2019n = 464

+90% Say on Pay 70% - 90% Say on Pay Below 70% Say on Pay

9

• Average Director election vote support was 40 basis points

lower than the average support observed in 2018

• Over the past five years, average Director election vote

support at companies that received a Say on Pay vote

below 50% in the prior year is 6 percentage points lower

than at companies that received above 70% vote support

• Average support for female Director nominees was 180

basis points higher than average support for male Director

nominees

79.1% 78.8% 78.3% 77.5% 75.2%

14.4% 14.8% 14.7% 14.6% 15.6%

3.7% 3.5% 3.9% 4.7% 5.3%

2.8% 2.9% 3.0% 3.2% 3.9%

2015Avg.=96.6%

n=18,660

201695.9%

n=18,347

201795.7%

n=18,306

201895.5%

n=18,278

201995.1%

n=17,497

95%+ 85 - 95% 75 - 85% Below 75%

95.7% 95.6% 95.5%95.2%

94.7%

96.8% 96.8%96.6% 96.6% 96.5%

2015

n=18,660

2016

n=18,347

2017

n=18,306

2018

n=18,278

2019

n=17,497

Male Female96%

93%

90%

Above 70%

Say on Pay

n=65,127

50 - 70%

Say on Pay

n=3,680

Below 50%

Say on Pay

n=1,291

10

• The median support for environmental proposals was 500 basis points lower than last year, while median support for social

proposals is 270 basis points higher than last year

• Zero environmental proposals and nine social proposals (6.2%) received greater than 50% support in 2019

• By comparison, 11.9% of environmental proposals and 6.5% of social proposals received majority support in 2018

• Social topics became a more prominent focus area for shareholders in 2019, reflected by the larger number of proposals (146) and

the higher median vote support (29%)

Two large shareholders, Pax World Mutual

Funds and the Comptroller of New York City,

submitted a proposal requesting that Oracle

report on its gender pay gap and whether one

exists within the company.

The proposal received 35% vote support

• The proponents expressed concerns about

potential regulatory, litigation, and

reputational risks of gender pay disparity and

noted public commitments by Apple, eBay,

Microsoft and other technology companies to

publish gender pay assessments

• The proponents also cited research that

shows: (i) pay equity is associated with more

gender diversity, (ii) women are

underrepresented in the technology industry

workforce; and, (iii) representation of women

falls in higher-level positions

• The Board recommended voting “Against” the

proposal, stating that the company promotes

equality through its hiring, pay, and

promotion processes and noting its STEM-

related community initiatives that are focused

on helping women in technology

• ISS recommended voting “For” the proposal

and noted that the company has stated its

commitment to promoting gender diversity

but would benefit from publishing progress

and results in this area

20% 19%23% 22% 23%

26% 28%31%

26%

2011n = 39

2012n = 29

2013n = 28

2014n = 45

2015n = 64

2016n = 75

2017n = 67

2018n = 42

2019n = 29

20%16%

22% 21% 20% 18% 17%

26%29%

2011n = 101

2012n = 115

2013n = 122

2014n = 142

2015n = 128

2016n = 132

2017n = 120

2018n = 108

2019n = 146

Zero environmental proposals received majority support in 2019

Nine social proposals received majority support in 2019

11

Average Russell 3000 Say on Pay support in 2019 (90.5%) was 20 basis

points higher than in 2018; however, this marked the third lowest vote

result since voting began in 2011 and was well below the highest level of

average support (91.7%) observed in 2017.

Shareholders continue to push company leadership to enhance their

governance practices and their approach to managing social and

environmental business risks, as well as to expand proxy disclosure of these

efforts. Shareholders have started to use Say on Pay voting as a mechanism

to voice concerns with the overall practices of company leadership, and not

just compensation. Performance evaluations previously focused solely on

financial measures, but have now taken on a broader scope by considering

companies’ management of social and environmental business risks.

We expect that the increased number of factors considered when

shareholders cast votes will lead to a further decrease in average vote

support and cause the range of vote outcomes for companies that perform

similarly on “standardized” investor and proxy advisor pay and performance

tests to be less predictable.

The Russell 3000 Say on Pay failure rate in 2019 was 10 basis points higher

than last year’s failure rate of 2.7%. The 2.7% failure rate was the third

highest observed since voting began in 2011 and was 110 basis points

higher than the average failure rate in 2016 and 2017. In addition,

approximately 9% of companies received support below 70% in 2019 and

2018, compared to just 7% of companies in 2017.

Flat TSR performance for the Russell 3000 in 2018 placed additional stress

on quantitative evaluations of CEO pay and performance used to inform

2019 Say on Pay votes. TSR results and bearish financial outlooks in several

industries caused pay and performance misalignment and performance goal

rigor to be two of the most prevalent causes of vote results under 50%.

We anticipate the failure rate will remain elevated in future years as

shareholder and proxy advisors scrutinize a wider range of minor

“problematic” compensation program mechanics.

Semler Brossy publishes a bi-weekly Say on Pay & Proxy Results report during proxy season that provides statistics and analysis on Say

on Pay, the CEO Pay Ratio, and other proxy voting topics.

Each year, we also publish four predictions for the upcoming proxy season prior to our first report to spotlight the key themes and

trends we expect will be focus areas for shareholders when voting. We intentionally made bold predictions for 2019 in anticipation of

the second year of the CEO Pay Ratio disclosure requirement and after we observed Say on Pay vote results shift dramatically in 2018.

The following pages summarize the results of our predictions – three of which were nearly correct – and offer additional commentary on

these topics in review of the 2019 proxy season.

We will share our predictions for the 2020 proxy season in March and publish our first report at the start of April. Click on the following

link to subscribe to Semler Brossy’s Dialogue weekly e-newsletter to receive the Say on Pay reports and the latest reporting, opinion,

and research articles on executive compensation: https://www.semlerbrossy.com/dialogue/subscribe/

75% 78% 75% 76%

17% 15% 16% 15%

6% 5% 6% 6%

1.7% 1.5% 2.6% 2.7%

2016Avg. = 90.9%

n = 2 ,117

Failures = 35

201791.7%2,357

35

201890.2%2,154

57

201990.5%2,237

60

Say on Pay Results

90% + 70 - 90% 50 - 70% B e low 50%

1.4%

2.6% 2.5%2.4%

2.8%

1.7%1.5%

2.6% 2.7%

3.0% Prediction

2011 2012 2013 2014 2015 2016 2017 2018 2019

Russell 3000 Failure Rate

12

Russell 3000 average Director election vote support declined by 40 basis

points to 95.1% in 2019. This decrease marked a fifth consecutive year of

declining Director election support since 2015 when average support was

96.6%.

Shareholders continue to place heightened scrutiny on Director nominees

as pay for Board service increases and as the role of Directors expands.

Further, proxy advisors and large investors introduced formal voting policies

that define circumstances under which they will vote against certain

Directors, such as for companies with no female Directors or companies

that have not properly managed environmental or social risks.

We expect shareholders will use these policies to vote more critically

against the Chair or members of committees whose performance does not

meet shareholder expectations. As a result, the range of vote support for

Directors nominees will likely widen and average vote support will continue

to decline.

78.8% 78.3% 77.5% 75.2%

14.8% 14.7% 14.6% 15.6%

3.5% 3.9% 4.7% 5.3%

2.9% 3.0% 3.2% 3.9%

2016Avg. = 95.9%

n=18,347

201795.7%

n=18,306

201895.5%

n=18,278

201995.1%

n=17,497

Director Election Results

95%+ 85 - 95% 75 - 85% Below 75%

10% of Russell 3000 companies reported an alternate CEO Pay Ratio in

2019.

The Pay Ratio has not received much attention from media or investors

despite shareholder requests for companies to disclose more information

about their CEO Pay Ratio. As a result, most companies made few or no

changes to their CEO Pay Ratio disclosure from a year ago and focused

primarily on meeting the minimum disclosure required by Dodd-Frank

legislation. Some companies expanded disclosure to add clarity about

certain nuances that affected the Pay Ratio or led to year-over-year

increases, but this was uncommon.

We do not expect the Pay Ratio to garner additional interest (unless

additional disclosure requirements are added) in the near future; however,

we do anticipate shareholder requests for companies to be more

transparent about their approach to human capital will lead to enhanced

disclosure in other sections of the proxy.

No Alt. Ratio Disclosure: 90%

Disclosed Alt. Ratio: 10%

Lower Alt. Ratio (n=178)

Higher Alt. Ratio (n=28)