IN THIS ISSUE

THIS REPORT CAN BE ACCESSED AT

SEMLERBROSSY.COM/SAYONPAY

Our firm wishes our clients and other readers well during this challenging time. Given the disruptions

and fast-developing events, we are working to bring you the most up to date news regarding the

COVID-19 crisis and its impact on human capital management and compensation decisions. Please visit

our website at www.semlerbrossy.com/COVID/ for more detail.

1

This section summarizes executive and Director pay-related actions announced publicly by Russell 3000 companies in response to the

COVID-19 pandemic. See more detailed coverage of pandemic-related pay actions at www.semlerbrossy.com/COVID/

• COVID-19 started to disrupt companies’ operations in January; the breadth and financial impact of the pandemic escalated during

March and April; and now, corporate leadership teams are faced with challenging decisions to stabilize operations, re-open offices

and stores, and manage broader human capital issues within financial constraints

• Through May 30, 596 Russell 3000 companies announced or publicly disclosed compensation actions in response to COVID-19; we

note that some companies did not announce the magnitude of reductions and acknowledge that the number of companies

implementing reductions over this period may be higher due to unannounced actions

• Thus far, the median CEO salary reduction is 40%; although,

23% of companies have announced a 100% reduction, while

21% announced a 50% reduction

• By comparison, the most common salary reduction for other

NEOs and senior members of Management is 20%

• Many companies have announced cash retainer reductions

for Directors that match salary reductions for their CEO - the

median reduction to Director cash retainers is 50%; however,

24% of Directors have forfeited 100% of their cash retainer

• The number of pay reduction announcements spiked in the

first week of May, but has been on a downward trend since

the second week of May

Source: Semler Brossy data and analysis; Data is through 5/30/2020.

Executive & Board:

63%

CEO, Other NEOs, & Other Senior

Mgmt:

64%

Executive Only: 36%

CEO & Other NEOs: 29%

Board Only: 1%

CEO Only: 7%

Total

n: 596

Management

n: 585

71

39 37 32

63

199

26

12 2124

39

25

6

1

12

1

1

1

98

5258

58

103

44

16

5

4/5 -

4/11

4/12 -

4/18

4/19 -

4/26

4/26 -

5/2

5/3 -

5/9

5/10 -

5/16

5/17 -

5/23

5/24 -

5/30

Board Only

Executive Only

Executive & Board

25%

16%

12%

21%

1% 1% 1%

23%

0% -24%

n: 106

25%n: 69

26% -49%n: 50

50%n: 88

51% -74%n: 5

75%n: 5

76% -99%n: 5

100%n: 99

2

Specialty Retail:

28%/52

Consumer Discretionary: 31%/187

Hotels, Restaurants & Leisure:

27%/50

Industrials: 22%/133

Textiles, Apparel & Luxury Goods: 11%/21

Health Care:

13%/75

Household Durables: 10%/19

IT: 9%/51

Internet & Direct Marketing Retail: 4%/8

Real Estate: 6%/35

Other: 20%/37

Comm. Services: 5%/30

Energy: 8%/49

Materials: 3%/19

Consumer Staples: 1%/7

Financials: 2%/9

Utilities: 0.2%/1

0 100 200 300 400 500 600Announcements

• The number of announcements by Russell 3000 Industrials companies increased from 101 to 133 since our last report, the largest

increase of any sector over that period

• The Consumer Discretionary and Industrials sectors (which includes Airlines and adjacent industries) continue to have the highest

percentage of announcements due to the impact of social distancing and quarantine measures on their operations

• We have observed a similar prevalence of pay reduction announcements for Russell 3000 and S&P 500 companies, which suggests

the pandemic’s impact on executive and Board compensation has been broad, regardless of company size

Russell 3000 S&P 500

Excludes Russell 3000 sectors below ten announcements: Financials (9/2%) Cons. Staples (7/6%), Utilities (1/1%) and S&P 500 sectors

below seven announcements: Energy (6/22%), Real Estate (6/19%), Comm. Services (5/20%), Materials (4/14%), Cons. Staples

(2/6%), Financials (1/2%).

187

133

7551 49 35 30 19

329

392

540

369

156193

113 128

Cons.Discr.56.8%

Industrials33.9%

HealthCare

13.9%

IT13.8%

Energy31.4%

RealEstate18.1%

Comm.Services26.5%

Materials14.8%

No Announcements

Announced Reductions

34

25

148

6570

59

71

Cons. Discr.52.3%

Industrials35.7%

Health Care23.7%

IT11.3%

3

• The current number of failures (34) and failure rate

(2.3%) is the same as this time last year

• The 91.0% average vote result thus far in 2020 is 10

basis points higher than the average vote result at this

time last year but is 50 basis points lower than our last

report

• 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

34 Russell 3000 companies (2.3%) failed Say on Pay thus far in 2020. 25 companies failed since our last report and are highlighted in

bold on page 5 of this report.

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% 78% 76%

21% 19% 15% 17% 16% 17% 15% 16% 15% 13% 18%

6% 6% 6% 6% 6% 6% 5% 6% 6% 6% 4%

1.4% 2.6% 2.5% 2.4% 2.8% 1.7% 1.5% 2.6% 2.7% 2.3% 2.3%

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

2019 YTD90.9%1,501

34

202091.0%1,458

34

Below 50%

50 - 70%

70 - 90%

90%+

PERCENTAPPROVAL

4

• The current average Say on Pay vote result for companies

that received an ISS “Against” recommendation is 30

percentage points lower than for companies that received

an ISS “For” recommendation

• The 30-percentage point gap is at the higher end of the

historical average range of 24 to 32 percentage points

• At this time last year, we observed a 30% difference, which

held at 30% by year end; at this time two years ago, we

observed a 31% difference, which held at 31% by year end

• ISS has recommended “Against” 35% of companies in 2020

that also received an “Against” recommendation in 2019

• Companies that received an “Against” recommendation

from ISS in 2019, but did not receive an “Against” in 2018,

have received a second consecutive “Against” at a rate of

27% in 2020

• This rate jumps to roughly 50% for companies that

received two or more consecutive “Against”

recommendations

• This is consistent with the results observed from 2014 to

2019

Source: Semler Brossy data and analysis; ISS Voting Analytics. Russell 3000 sample effective as of July 1, 2019.

93% 80% 78% 77% 77% 75% 74% 73% 73% 68% 64%

5%

14% 16% 16% 17% 13% 17% 23% 24% 30%

28%

2%

2% 4% 3% 4% 6% 5%

4% 2%

3%

4%

4% 1% 4% 2% 5% 4% 1% 4%

UtilitiesAvg.: 94.5%

n: 57

ConsumerStaples91.0%

51

Industrials91.8%

245

Real Estate90.9%

125

Financials91.4%

317

InformationTechnology

89.4%157

Health Care89.3%

157

ConsumerDiscretionary

91.5%147

Materials91.4%

91

Comm.Services90.1%

37

Energy89.0%

74

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

94%

64%

0%

25%

50%

75%

100%

ISS Forn: 1,322

ISS Againstn: 136

2011 2020

75

16

5 0 2

28

14

3 4 5

"Against" in2019

"Against" in2018-19

"Against" in2017-19

"Against" in2016-19

"Against" in2015-19

"Against" in 2020

"For" in 2020

FOR MORE INFORMATION, VISIT US AT SEMLERBROSSY.COM

SEMLER BROSSY CONSULTING GROUP

11755 WILSHIRE BOULEVARD, 10TH FLOOR

LOS ANGELES, CA 90025

310.481.0180 | INFO@SEMLERBROSSY

5

2020 Failed Say on Pay Vote Results1

Russell 3000, n=34 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-

Company 2020 q 2019 YOY Failures Relation Practices Goals Disclosure Based Equity Grants

Intel Corporation 50% 60% -10% 1 X X X

Noble Corporation plc 50% 56% -7% 1 X X

Altria Group, Inc. 49% 95% -45% 1 X X X

Kilroy Realty Corporation 49% 15% 34% 5 X X

Westwood Holdings Group, Inc. 49% 64% -15% 1 X X X

Penns Woods Bancorp, Inc. 49% 54% -5% 1 X X X

Everbridge, Inc. 48% 98% -50% 1 X X X

CIM Commercial Trust Corporation 47% - - 1 X X

IQVIA Holdings Inc. 46% - - 1 X X X X

Investors Bancorp, Inc. 46% 94% -48% 1 X X

Home Bancshares, Inc. (Conway, AR) 46% 92% -46% 1 X X X X

Fidelity National Information Services, Inc. 46% 93% -47% 1 X X X

Paycom Software, Inc. 45% 90% -45% 1 X X X

Tandem Diabetes Care, Inc. 45% 50% -6% 1 X X X X

Vornado Realty Trust 43% 65% -22% 1 X X X

Laredo Petroleum, Inc. 42% 68% -25% 1 X X

Colony Capital, Inc. 42% 69% -27% 1 X X

SS&C Technologies Holdings, Inc. 42% 42% 0% 2 X

Federal Realty Investment Trust 42% 93% -51% 1 X X

Bunge Limited 41% 82% -41% 1 X X X

Digimarc Corporation 40% 47% -7% 3 X X

Mallinckrodt plc 38% 37% 1% 2 X X

Associated Banc-Corp 37% 94% -58% 1 X X X

Cryoport, Inc. 36% 54% -18% 1 X X X

Tutor Perini Corporation 34% 37% -2% 10 X X X

Acuity Brands, Inc. 33% 53% -20% 1 X X X

Medpace Holdings, Inc. 33% - - 1 X X

Cleveland-Cliffs Inc. 32% 70% -37% 2 X X X

Assertio Holdings, Inc. 32% 96% -64% 1 X X

U.S. Silica Holdings, Inc. 30% 95% -65% 1 X X

Daseke, Inc. 25% 96% -71% 1 X X

CVS Health Corporation 24% 90% -66% 1 X X X

QUALCOMM Incorporated 18% 79% -62% 1 X X X X

USA Technologies, Inc. 16% - - 1 X X

Count (n=34) 19 21 12 14 11 13

1 As of May 31, 2020

6

• Thus far in the proxy season, shareholders have voted on 105 social proposals and 24 environmental proposals – median support for

social proposals is 28% and for environmental proposals is 23%

• Ten social proposals (10%) and four environmental proposals (17%) have received greater than 50% support in 2020 – proposals that

received greater than 50% support since our last report include requests on Board diversity and reports on sustainability, alignment

with Paris Agreement climate goals, and political lobbying and contributions

• By comparison, 6.2% of social proposals and 0% of environmental proposals received greater than 50% support in 2019

See additional analysis and insights on ESG in executive incentives at www.semlerbrossy.com/corporate-purpose-guidance/

Shareholders submitted a proposal requesting

that O’Reilly Automotive publish a report on its

workforce’s diversity and inclusion practices.

The proposal passed with 65% vote support

• The proponents of the proposal requested

increased disclosure of employee metrics

given the company’s elevated risk from its low

retail wages and underrepresentation of

women and minorities in management

• The proponents of the proposal referenced

the sector-specific standards developed by

the Sustainability and Accounting Standards

Board (SASB) to help identify, manage, and

communicate information on these topics in a

way that is comparable to other companies

• The Board recommended that shareholders

vote “Against” the proposal and asserted that

the company maintains diversity and inclusion

policies and reports on such policies in its

Sustainability, Social & Governance Report;

additional reporting would be an inefficient

use of company resources

• ISS recommended “For” the proposal and

cited that while the company does report on

its policies, it does not disclose statistics

about its labor force such as diversity, percent

of employees earning minimum wage, etc.; as

such, the requested disclosure would benefit

shareholders and likely impact the company

positively

20% 19%23% 22% 23%

26% 28%31%

26%23%

2011n: 39

2012n: 29

2013n: 28

2014n: 45

2015n: 64

2016n: 75

2017n: 67

2018n: 42

2019n: 29

2020n: 24

20%16%

22% 21% 20% 18% 17%

26%29% 28%

2011n: 101

2012n: 115

2013n: 122

2014n: 142

2015n: 128

2016n: 132

2017n: 120

2018n: 108

2019n: 146

2020n: 105

7

• Thus far, average vote support for Director nominees

(95.6%) is equal to the average vote support at this time

last year, which is 50 basis points higher than the eventual

year-end average support from last year

• One of our proxy season predictions is that average vote

support for Director nominees will drop below 94.5% by

the end of the year

• 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 six percentage points lower

than at companies that received above 70% vote support

78.8% 78.3% 77.5% 75.2% 76.8%

17.0% 17.2% 17.3% 18.8% 18.9%

3.9% 4.3% 5.0% 5.7% 4.1%0.3% 0.2% 0.2% 0.3% 0.2%

2016Avg: 96.6%n: 18,347

201795.7%18,306

201895.5%18,278

201995.1%17,497

202095.6%10,440

95%+ 80 - 95% 50 - 80% Below 50%

95.6% 95.5%95.2%

94.7%95.2%

96.8% 96.6% 96.6% 96.5%96.9%

2016

n: 18,347

2017

n: 18,306

2018

n: 18,278

2019

n: 17,497

2020

n: 10,440

Male Female96%

94%

90%

Above 70%Say on Payn: 59,082

50 - 70%Say on Pay

n: 3,376

Below 50%Say on Pay

n: 1,115

8

• Average vote support for equity proposals thus far in the proxy season (90.7%) is 110 basis points higher than the 89.6% average

support observed at this time last year

• Two proposals have received vote support below 50% thus far in 2020 – a stock option exchange program at Macrogenics and an

omnibus plan amendment at Daseke; two proposals received below 50% support in each of 2019 and 2018

• We expect more companies to request shares next year due to the higher dilution levels caused by equity grants made during the

challenging market environment in 2020

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

83%87% 88% 85% 85% 86% 87%

79%83% 83% 83% 80%

85% 86%

0%

20%

40%

60%

80%

100%

2014n: 684

2015n: 607

2016n: 566

2017n: 678

2018n: 419

2019n: 464

2020n: 373

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

34%48% 52% 55%

65% 61% 65% 60% 63% 67% 72%

52%

43% 38% 37%30%

31% 28%32% 27%

27%22%

13% 8% 9% 8% 6% 8% 7% 8% 9% 5%

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

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

2019 YTD89.6%

333

2

202090.7%

396

2

Below 50%

50 - 70%

70 - 90%

90%+

PERCENTAPPROVAL