IN-DEPTH: Shareholder pay votes reveal sector divide
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While shareholder support for executive pay packages has been rising in recent years, investor confidence is far from universal with significant pockets of resistance continuing to surface in sectors such as technology and real estate.
According to Diligent Market Intelligence (DMI) data, average support for “say on pay” proposals at Russell 3000 companies stood at 90.8% in the first half of 2025, up from 89.6% in 2021. The share of companies failing these non-binding votes, defined here as less than 50% support, saw a sharper fall from nearly 3% in 2022, to just 0.8% in the first half of this year.
“Here in the U.S., there is now a pretty clear understanding of what is best practice and what are some of those guardrails around how to put together an appropriately designed compensation plan,” noted Rob Main, managing partner at Jasper Street Partners. “But I think in this environment where investors are more cautious, if you're going well outside those lines, those are the situations that are going to get the attention of the investors, and those are going to be the ones where they vote against say on pay.”
Main pointed to three red flags that are driving revolts: One-time awards, inflationary changes to pay plans that are already in place, and compensation committees using a lot of discretion and not backing that up with clear disclosure around why.
Technology pushback
Yet a more divided picture lies beneath the averages with certain sectors struggling to convince investors that their pay practices are fair and aligned with performance.
Technology is one of the sectors to consistently test investor patience on pay. Average support for pay proposals across the sector has hovered below 89% since 2021, with the first half of 2025 at 88.2%. Software has been especially susceptible, DMI data show, with companies like Forge Global, Core Scientific and Progyny facing notable opposition toward pay plans at their 2025 annual meetings.
The race for talent among technology companies is also the most extreme, Ira Kay at compensation advisory firm Pay Governance, told DMI. “It’s the most cutthroat of any sector.”
That competition has driven controversial practices, including large upfront bonuses and underpriced stock options. At Microchip Technology, shareholders rejected the company’s executive pay plan in August, with 54.4% of the votes cast against, down from nearly 94% support achieved on the plan presented a year earlier. Chair and CEO Steve Sanghi’s total granted compensation jumped to $21.4 million following his return as chief executive in late 2024, driven largely by stock awards.
Governance gaps in real estate
Weak governance has made real estate another flashpoint. In the first half of 2025, 2.5% of “say on pay” plans in the sector failed to reach 50% support, the highest rate of any industry examined by DMI.
“The real estate industry is not known for great governance, so it’s not surprising to see persistent opposition,” noted Main. Land and Buildings is one activist to have honed in on the issue with its founder Jonathan Litt urging shareholders to vote against pay packages at 10 companies this year alone.
Litt has argued that many real-estate boards skew their peer comparisons to justify inflated compensation packages for CEOs at smaller or under-performing companies. “A CEO of a company and their compensation committee will say, ‘We want to pay this guy a lot of money, so let’s create a peer group of other CEOs who also get paid a lot of money,’” Litt stated in a June podcast. He cited a study of 59 REITs in which 15 consistently under-performed while compensation remained largely undiminished.
Cyclical swings
While some sectors have seen consistent opposition, or a lack of it, opposition in others appears more cyclical.
In 2021, more than 6% of “say on pay” proposals failed in the energy sector, driven in part by concern over a failure to meet environmental guidelines. Context is everything; Marathon Petroleum faced one of the largest pay defeats in the S&P 500 index that year, with nearly 70% of votes cast rejecting its compensation plan. The Teamsters union led the “vote no” campaign, citing a $6 million stock award granted to former Chair and CEO Gary Heminger soon after his retirement. The backlash followed layoffs affecting 12% of employees and $2.1 billion in CARES Act tax benefits. DWS Investment also pointed to “ESG controversies,” including opposition to climate legislation and alleged violations of indigenous rights linked to the Dakota Access Pipeline. But with ESG no longer resonating with investors at the same level, there have been no such failures since 2023.
A similar pattern played out in healthcare where opposition peaked in 2022 when 4.5% of pay plans failed. Biotech was especially vulnerable that year, accounting for half of the 59 healthcare companies that saw opposition of 20% or more. Much of that dissent was linked to disappointment over stock performance in a sector that had seen a rush of IPOs in previous years. According to BioIndustry Association Finance Report 2022, of the 226 biotechs that held IPOs on Nasdaq Stock Market from the start of 2020 through to November 2022, 80% were trading below the offer price.
The danger zone
With the Russell 3000 delivering total shareholder returns of 24% in 2024, investors have been more supportive of pay seen to be designed within established guardrails.
However, as markets shift, investors may grow less forgiving of outsize awards in underperforming sectors. “This has been an AI-driven bull market, with big disparities across industries,” said Main. “That will likely translate into more variation in ‘say on pay’ outcomes next year, some more failures, and more companies in that 50% to 70% danger zone.”
