A recent study released by Willis Towers Watson charts how successful Russell 3000 companies adjust the compensation of executives, and finds out that small-cap companies face most likely failures in say-on-pay voting.

As of now, 22 non S&P-companies failed in gaining support from shareholders during say-on-pay votes held in 2018, as compared to the 17 negative cases for the whole year of 2017. Within S&P 600 companies, one can observe the increasing trend from 7 for the whole year of 2017 to 11 as of now in 2018.

Analysts responsible for the study states that in spite of the boards of small-cap companies being relatively small and less diverse, it does not necessarily imply that recent failures in say-on-pay are indicative of any fault in corporate governance. Instead, analysts suggest that investors and shareholders require scrutinized information regarding changes in executive compensation packages, as well as how these relate to corporate strategy. Compared to larger companies, small-caps possess less resources and thus cannot invest a lot to engage with all kinds of shareholders and explain plans of compensation, or cannot afford to have a corporate governance department to handle these matters.

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