Ongoing Say-on-Pay Updates

Biglari Holdings disclosed in their 8K filing this past week that they failed to receive majority support for their SOP proposal in 2013. ISS cited a pay for performance disconnect as the primary reason for their AGAINST vote recommendation. Specifically, their CEO was awarded a $10 million bonus under the terms of his 2010 Incentive Bonus Agreement (based on growth in adjusted book value) however, TSR has only been average relative to peers over the past 1- and 3-year timeframes. In addition, Biglari  failed all three quantitative tests under the ISS pay for performance evaluation. The SOP proposal failed to pass as it was only supported by 33% of shareholders.

 

 Russell 3000 Companies   Through April 15th, 2013

 

 

PASS/FAIL Distribution

 

SOP 

Number of

 

Average

Outcome

Companies

Prevalence

Support %

Pass

171

97.7%

93.4

Fail

4

2.3%

35.6

Total

175

100.0%

92.1

 

 

FOR/AGAINST Distribution

 

ISS Vote

Number of

 

Average

Average TSR at FYE

Recommendation

Companies

Prevalence

Support %

1-Year

3-Year

FOR

155

88.6%

95.2

35%

13%

AGAINST

20

11.4%

67.9

12%

4%

TOTAL

175

100.0%

92.1

32%

12%

 ISS AGAINST Recommendation Fail Rate

 

 

# of ISS

# of

Failure

Year

“AGAINST” Recs.

Failed Votes

Rate

2011

313

37

11.8%

2012

302

56

18.5%

2013

20

4

20.0%

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