Nicholas Sasso, Erin Conlon, and Jennifer Dorney, Product Specialist, Legal Analyst, and Head of Marketing respectively at DragonGC, along with colleagues Neil McCarthy, Sophia Ojjeh, and Leo Tadikonda, have released their third annual report detailing how companies responded to adverse "say-on-pay" votes by implementing robust shareholder engagement programs in the subsequent fiscal year. This comprehensive analysis, based on a DragonGC memorandum, scrutinizes the strategies and outcomes for Fortune 1000 companies during the 2025-2026 proxy season, building upon their previous reports covering the 2023-2024 and 2024-2025 periods. The findings underscore a growing trend of proactive engagement by corporate boards and management teams to address shareholder concerns regarding executive compensation, a critical element of corporate governance.
The Say-on-Pay Mandate and Its Implications
The Securities and Exchange Commission (SEC) mandates that publicly traded companies hold an advisory shareholder vote on executive compensation, commonly known as "say-on-pay." This vote, typically conducted annually, covers all executive compensation disclosures as outlined in S-K Item 402 of SEC regulations, encompassing the Compensation Discussion and Analysis (CD&A), detailed compensation tables, and accompanying narrative disclosures. While these votes are non-binding, they serve as a significant barometer of shareholder sentiment. Historically, most say-on-pay proposals receive overwhelming support, often exceeding 80% of the votes cast by shareholders. However, a deviation from this norm—an approval rate below 80% or, in more severe cases, a failure to achieve a majority vote—signals substantial shareholder dissatisfaction.
Such adverse outcomes are frequently precipitated by negative voting recommendations from influential proxy advisory firms like Institutional Shareholder Services (ISS) and Glass Lewis, or by significant institutional investors themselves. These recommendations are often based on perceived violations of their voting policies concerning executive compensation. Despite the non-binding nature of the vote, these endorsements carry considerable weight, acting as an effective enforcement mechanism within the corporate governance landscape. Companies that experience an adverse say-on-pay vote are compelled to reassess their compensation strategies and engage directly with shareholders to rectify the underlying issues.
Methodology: A Deep Dive into Corporate Responses
DragonGC’s research methodology for this report involved a detailed examination of publicly available filings and disclosures. The team analyzed DEF 14A proxy statements filed by Fortune 1000 companies, specifically focusing on those that received adverse say-on-pay votes in the preceding proxy season. The analysis then tracked the engagement activities undertaken by these companies in the subsequent year, evaluating the nature of their outreach, the specific concerns addressed, and the resultant changes to their executive compensation programs and governance practices. The core objective was to identify common themes, effective strategies, and the overall impact of shareholder engagement on executive pay structures and corporate decision-making. The report highlights that companies often respond to negative say-on-pay votes with a structured shareholder engagement program during the ensuing proxy season, a practice that has become increasingly standardized.
Fortune 1000: A Snapshot of Say-on-Pay Recovery
The report presents compelling data illustrating the dramatic improvements in say-on-pay vote outcomes for companies that actively engaged with their shareholders following an adverse vote. The table below showcases the performance of several prominent Fortune 1000 companies, demonstrating a significant rebound in shareholder support:
| Fortune Rank | Company | Ticker (DEF 14A) | 2025 Say-on-Pay | 2026 Say-on-Pay | Improvement |
|---|---|---|---|---|---|
| 622 | Tutor Perini Corporation | TPC | 31.5% | 97.6% | +66.1% |
| 312 | Otis Worldwide Corporation | OTIS | 39.4% | 93.9% | +54.5% |
| 777 | The Western Union Company | WU | 45.5% | 97.1% | +51.6% |
| 534 | PENN Entertainment, Inc. | PENN | 37.1% | 87.6% | +50.5% |
| 700 | Landstar System, Inc. | LSTR | 47.2% | 94.6% | +47.3% |
| 564 | O-I Glass, Inc. | OI | 66.0% | 96.3% | +30.3% |
| 101 | General Electric Company | GE | 70.9% | 96.5% | +25.6% |
| 3 | UnitedHealth Group Inc. | UNH | 60.1% | 82.6% | +22.5% |
| 567 | Simon Property Group, Inc. | SPG | 47.5% | 69.6% | +22.1% |
| 210 | L3Harris Technologies, Inc. | LHX | 74.1% | 94.9% | +20.8% |
| 180 | Live Nation Entertainment | LYV | 73.8% | 86.8% | +13.0% |
| 114 | Salesforce, Inc. | CRM | 76.9% | 80.8% | +3.9% |
Note: Voting results are calculated based on "for" and "against" votes. Sources: Fortune, SEC.gov, and DragonGC Analysis.
This data clearly illustrates a strong correlation between proactive shareholder engagement and improved say-on-pay outcomes. Companies that transitioned from significantly low approval rates to high double-digit percentages demonstrate the efficacy of their engagement strategies in rebuilding investor confidence.
Engagement Strategies: A Multi-faceted Approach
The report categorizes the engagement strategies employed by companies into three primary approaches, each tailored to specific needs and shareholder feedback.
Broad and Direct Engagement
Several companies, including PENN Entertainment, UnitedHealth Group, and GE Aerospace, adopted a strategy of broad and direct shareholder outreach. This involved targeting a substantial portion of their shareholder base and actively involving independent directors in discussions. For instance, PENN Entertainment engaged with 17 shareholders representing approximately 48% of its outstanding shares, holding meetings with nine representing about 36%. Crucially, independent board members attended 100% of the engagement meetings with the company’s top 30 institutional holders. UnitedHealth Group proactively contacted 46 shareholders, representing around 60% of outstanding shares, and met with 21 shareholders, accounting for approximately 51% of ownership, including all 12 that had voted against the say-on-pay proposal. Independent directors were present in every discussion. GE Aerospace reached out to shareholders representing roughly 54% of total outstanding shares and successfully engaged with approximately 48%, with independent directors directly engaging holders representing about 29% of outstanding shares. The Chair of the Compensation Committee also played a significant role, participating in numerous meetings based on investor preference. This comprehensive approach reflects a Board-driven initiative to understand and address compensation-related concerns, informing subsequent decisions.
Structured and Recurring Engagement
In contrast, companies like Intel, Goldman Sachs, and Live Nation Entertainment opted for structured and recurring engagement processes, moving beyond a single post-vote outreach. Intel maintained a year-round engagement cycle, encompassing the review of annual meeting results, off-season outreach, feedback incorporation, and in-season discussions. Goldman Sachs initiated its executive compensation and governance engagement prior to the 2025 Annual Meeting and sustained this dialogue afterward, culminating in over 120 meetings with representatives of shareholders owning more than 45% of outstanding shares. Live Nation engaged shareholders both before and after the 2025 Annual Meeting, specifically contacting approximately 20 stockholders regarding its compensation program and say-on-pay matters. They held meetings with shareholders representing well over 50% of outstanding shares and implemented a more proactive engagement plan to foster continuous dialogue with management and the Board. These ongoing programs provided shareholders with multiple avenues to voice their feedback, enabling companies to integrate investor perspectives into compensation deliberations throughout the year.
Targeted and Topic-Specific Outreach
Landstar System, Otis Worldwide, and O-I Glass adopted a more targeted approach, focusing their engagement on specific compensation concerns identified during the say-on-pay process. Landstar System engaged with key shareholders and proxy advisors to discuss the CEO’s equity award, vesting and performance conditions, the CEO transition process, short-term incentive plan design, and related disclosures. Otis Worldwide addressed issues such as off-cycle equity awards, PSU design, the short-term incentive program, and succession planning. The primary concern identified for Otis was the 2024 off-cycle awards, with investors expressing no material concerns about the annual PSU program and welcoming proposed enhancements to accountability. O-I Glass invited its 15 largest shareholders, representing approximately 67% of outstanding shares, to discuss its executive compensation program, ultimately engaging with holders representing about 44%. The Independent Board Chair and Compensation and Talent Development Committee Chair participated in meetings with shareholders representing roughly 31% of outstanding shares. This focused outreach revealed that opposition primarily stemmed from 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 highlight the effectiveness of precise outreach in pinpointing key concerns and guiding targeted corrective actions.
Responses to Shareholder Feedback on Executive Compensation
The engagement efforts directly influenced a range of adjustments to executive compensation structures and policies.
Pay Reductions and Lower Award Opportunities
PENN Entertainment, Tutor Perini, and The Western Union Company responded to shareholder concerns regarding pay magnitude and award levels by implementing reductions or constraints on executive compensation. PENN Entertainment reduced its CEO’s target equity award value for 2026 by $7.87 million, a 41% decrease in long-term incentive opportunity, and lowered the CEO’s total target direct compensation by 31% compared to 2025. No target compensation increases were approved for other named executive officers. Tutor Perini reduced the Executive Chairman’s target annual compensation by 37% in 2025 compared to his prior role as CEO, with an additional 8% reduction planned for 2026. The new CEO’s 2025 compensation was positioned below the median of the company’s peer group. The Western Union Company approved no above-target or one-time CEO awards in 2025 and did not anticipate similar awards for 2026. Furthermore, the company exercised negative discretion to reduce the CEO’s 2025 annual incentive payout by an additional 30%. These actions represent direct responses to shareholder concerns through decreased target compensation, curtailed equity opportunities, elimination of supplemental awards, and downward adjustments to incentive payouts.
Restrictions on Special, One-Time and Front-Loaded Awards
UnitedHealth Group, Otis Worldwide, and The Western Union Company implemented policies or made commitments to limit the use of exceptional executive awards. UnitedHealth Group established a policy against granting front-loaded awards except in extraordinary circumstances, which the company does not currently foresee. It also confirmed that stock awards constituting executives’ annual target compensation opportunities would continue to be granted annually through its regular process. Otis Worldwide committed to refraining from granting future off-cycle equity awards to its incumbent CEO and stipulated that such awards to other executive officers would only be considered in rare and exceptional circumstances. The Western Union Company stated that compensation similar to the CEO’s 2024 above-target grant was not awarded in 2025 or 2026 and pledged to avoid similar compensation in the future unless extraordinary circumstances arise. These commitments serve to curtail the future use of large, episodic awards and reinforce a preference for compensation delivered through established annual programs.
Incentive Plan and Equity Structure Reforms
Companies also undertook significant revisions to their incentive plans and equity structures to enhance pay-for-performance alignment.
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 the link between pay and performance. L3Harris Technologies modified the relative Total Shareholder Return (TSR) payout structure for its 2026-2028 long-term incentive plan, setting threshold and maximum payout levels at the 25th and 75th percentiles, respectively. The company also removed the Strategic Goals metric from its annual cash-incentive program, focusing performance measurement on Free Cash Flow, Earnings Before Interest and Taxes (EBIT), Revenue, and Segment Operating Margin. Landstar System shifted its fiscal 2026 annual cash-incentive measure from diluted earnings per share to operating income. It established a threshold below which no annual cash-incentive funding or payout would occur if operating income fell more than 5% below budget. For its 2026 performance-based Restricted Stock Units (RSUs), the performance measure was changed 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. Additionally, it introduced performance-based stock options tied to Agentforce and Data 360 annual recurring revenue and a new Margin & Growth metric for its Performance-Based Stock Units (PRSUs). These revisions exemplify how companies can refine performance measures, restructure incentive mechanics, and more closely align executive rewards with financial results, strategic execution, and shareholder value creation.
Increased Performance-Based Pay and Equity Alignment
Salesforce, PENN Entertainment, and Live Nation Entertainment significantly strengthened the connection between executive compensation and measurable performance outcomes. Salesforce introduced performance-based stock options for all named executive officers, linked to Agentforce and Data 360 annual recurring revenue. It also added a Margin & Growth component to its performance-based RSUs and made the CEO’s fiscal 2026 long-term equity award entirely performance-based. For other named executive officers, 50% of their equity mix was performance-based. PENN Entertainment redesigned its 2026-2028 PSU program around cash flow from operations, incorporating a relative TSR modifier of up to 20% in either direction, and implemented a safeguard to prevent an upward modifier when absolute TSR is negative. Live Nation Entertainment adopted a policy prohibiting cash bonuses for executive officers without performance requirements, committed to avoiding identical or overlapping metrics across its short- and long-term incentive programs, and mandated that stock-price conditions applicable to performance awards be satisfied over consecutive days. These adjustments collectively enhance pay-for-performance alignment by more directly linking compensation to financial results, strategic execution, and shareholder returns.
Governance and Policy Reforms
Beyond compensation structures, companies also implemented reforms in governance and policy to bolster accountability.
Stronger Compensation Governance and Risk Controls
Tutor Perini, UnitedHealth Group, and Live Nation Entertainment adopted or announced safeguards designed to strengthen compensation accountability and mitigate the risk of inappropriate outcomes. Tutor Perini stated its intention 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 that included commitments for additional annual cash bonuses. It granted or will grant restricted stock unit awards in 2025 and 2027, vesting over three years based on continued employment, intended to substitute for these cash bonuses. Tutor Perini also indicated it no longer intends to grant cash-settled long-term incentive awards to its named executive officers. UnitedHealth Group elevated the CEO’s stock ownership requirement from eight to ten times base salary and stipulated that net shares acquired through the CEO’s one-time stock option award could not be sold before May 2030, five years post-grant. Live Nation Entertainment adopted a policy ensuring that no cash bonus awards are made to executive officers without performance requirements, prohibiting the use of identical or overlapping performance metrics across short- and long-term incentive programs, and requiring consecutive day attainment for awards with stock-price performance conditions. The Compensation Committee currently utilizes a 30-consecutive-day period and has committed not to use a period shorter than 20 consecutive days. These measures and stated commitments enhance compensation accountability through clearer performance conditions, extended long-term equity alignment, and limitations on guaranteed, duplicative, or accelerated compensation outcomes.
Compensation Committee, Board and Adviser Enhancements
PENN Entertainment, Landstar System, and Salesforce reinforced or formalized governance processes for reviewing and administering executive compensation. PENN Entertainment appointed a new Compensation Committee Chair, added two members to the committee, conducted a comprehensive Request for Proposal (RFP) process, and retained Semler Brossy as its new independent compensation consultant. With Semler Brossy’s support, the committee conducted an in-depth assessment of the executive compensation program against peer practices and investor expectations. Landstar engaged FW Cook after its 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 advisor meetings. Salesforce’s Compensation Committee collaborated with independent compensation consultant Semler Brossy to evaluate shareholder feedback and develop compensation program enhancements. Semler Brossy also provided guidance on incentive design and metrics, market and peer practices, compensation governance, and say-on-pay matters. These instances illustrate how companies can strengthen compensation oversight through refreshed committee leadership, independent advisory services, and more formalized review and decision-making procedures.
Enhanced Transparency and Disclosure Improvements
A critical component of rebuilding shareholder trust involves enhancing transparency and the clarity of disclosures.
Detailed Compensation Reporting and Proxy Enhancements
Goldman Sachs, L3Harris Technologies, and The Western Union Company significantly expanded their proxy disclosures to offer shareholders more lucid explanations of compensation arrangements, performance standards, and committee decision-making processes. Goldman Sachs provided augmented explanations concerning the rationale and structure of its Carried Interest Program and Retention RSUs, detailing their purpose, vesting and retention features, and intended alignment with long-term shareholder value. L3Harris Technologies broadened its disclosure regarding the Compensation Committee’s rationale for compensation decisions, the process for establishing 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. The Western Union Company redesigned its Compensation Discussion and Analysis section to elucidate the relationship between shareholder returns and realized executive compensation. It also incorporated business context, explanations of Compensation Committee decisions, and a scorecard illustrating performance against incentive targets. These enhancements underscore how clearer, more decision-useful disclosures can serve as a vital part of a company’s response when shareholders question pay-for-performance alignment or the rationale behind compensation outcomes.
Retention of Core Compensation Programs
While many companies made substantial adjustments, some maintained their core compensation programs, opting for targeted clarifications rather than broad overhauls.
No Substantive or Minimal Program Changes
Goldman Sachs, Simon Property Group, and GE Aerospace generally retained their existing compensation frameworks, choosing not to undertake extensive program redesigns. Goldman Sachs, after considering shareholder feedback and approximately 66% say-on-pay support, concluded that changes to its executive compensation program were not warranted. Instead, the company provided additional explanation regarding its Carried Interest Program and Retention RSUs. Simon Property Group determined that its 2025 vote reflected a specific concern regarding the relative magnitude of a single transaction-based award, rather than a rejection of the overall compensation program. The company maintained 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 primary reason cited was a preference against off-cycle equity grants, such as the CEO Incentive Grant that was part of a new agreement with Mr. Culp. GE Aerospace preserved its core compensation framework, kept the CEO’s 2025 total target compensation flat, and indicated 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 address specific compensation concerns through targeted limitations, ongoing engagement, and enhanced explanations, rather than a complete restructuring of the compensation program.
The findings of the DragonGC report highlight a significant evolution in corporate governance, where adverse say-on-pay votes are no longer viewed as mere advisory setbacks but as critical catalysts for proactive and substantive shareholder engagement. The data indicates that companies which actively listen to, and respond to, shareholder concerns through targeted communication and concrete adjustments are well-positioned to regain trust and improve their governance standing. This trend is likely to continue, reinforcing the importance of transparent and responsive executive compensation practices in today’s corporate landscape.
