Global Pharma Company — Say-on-Pay Turnaround: From Misalignment to Investor Support
A global pharma company with a market capitalization over $100 billion, integrating late-stage assets while exiting legacy portfolios. Prior say-on-pay support had drifted downward, and the draft CD&A triggered proxy-advisor concerns—TSR windfalls in a volatile tape, equity overhang/burn above peer median, and discretionary adjustments that lacked documented tests. Activist interest was rising, while long-only stewardship teams were signaling: “show me the guardrails.” Under a live proxy-season clock and public-view sensitivities, the chair and compensation committee chair engaged RefineValue to put the board back in control—re-anchor metrics to value creation, simplify the story, simulate the vote, and close red flags before filing.
Say-on-Pay Turnaround: Outcomes at a Glance
Mandate & Constraints
Establish a board-first pay-for-performance architecture that balances leading and lagging signals—R&D progress, quality/HSE, launch & access, cash/ROIC, and market outcomes—with clear caps, malus/clawback, windfall screens, and a documented discretion framework (when it applies, what evidence is required, how it is disclosed). Produce an investor-legible CD&A (two-page at-a-glance + visual exhibits) that preserves strategic flexibility. De-risk the vote via ISS/Glass Lewis simulations, segmented holder mapping, targeted engagement scripts (chair/CompCo), and a pre-file remediation plan. Set equity discipline (burn/run-rate within peer-median bands; dilution trajectory evidenced) and demonstrate pay-performance fit (realizable pay vs. TSR within policy corridors).
Comply with listing and disclosure rules under public view; avoid precedent-setting one-offs that handcuff future decisions; maintain parity of information; respect plan limits, tax/accounting guardrails, and global regulatory sensitivities. Operate to a time-boxed gate model—Draft 0 → red-team → Draft 1 (board) → pre-file owner/ISS-GL checks → filing → AGM Q&A drills → post-vote triggers—so issues are closed pre-filing, not on the AGM floor. Maintain independent-counsel posture: board governs, management executes; counsel in the loop, with attestations and evidence vault for audit/regulatory comfort.
What We Did
Reset philosophy and hard guardrails
We authored a board-owned pay philosophy with non-negotiables: metric stack (leading/lagging) with weight bands and caps; no-beta-pay rules; malus/clawback; windfall screens (market-beta filters, split-TSR optics); grant-timing and blackout policy. We codified a discretion rulebook (if/then tests, evidence required, disclosure language) so discretion is pre-agreed and provable, not ad hoc.
Architected the metric stack—and proved it works
We designed STI/LTI that pays for value, not volatility: R&D progress quality (stage-gate integrity, cycle time), Quality/HSE, Launch & Access (time-to-access, coverage), Cash/ROIC, and TSR optics—with no double-pay across plans. We back-tested 5 years (realizable pay vs TSR and peer set), tuned payout curves and caps, and showed corridors where realizable pay stays inside policy.
Aligned economics with disclosure (PvP coherence)
We reconciled the architecture with SEC Pay-versus-Performance: CAP vs TSR vs net income and peer TSR—so the Pay versus Performance Table, XBRL tags, and CD&A narrative tell the same story. One source of truth eliminated inconsistencies that trigger proxy flags.
Ran the proxy playbook and closed issues pre-file
We simulated ISS/Glass Lewis outcomes, mapped the register by policy archetype, and built base/bear vote models by segment. For each red flag (overhang/burn, front-loaded vesting, peer anomalies, discretion without tests) we proposed a pre-file fix (metric swap/weight shift, cap location, vesting reshape, narrative edit) with an estimated vote delta. Only fixes with clear uplift and no strategy handcuffs made the cut.
Made the CD&A legible at speed
Storyboard → two-page at-a-glance → visual exhibits: realizable-pay/TSR scatter, equity economics (burn/overhang/dilution), and a discretion log tied to tests. Length down, readability up, and the ask on page one made guardrails explicit.
Choreographed chair-level engagement under public view
We drafted chair/CompCo talking points and a crisp Q&A by holder archetype; enforced parity of information with counsel in the loop; and rehearsed leak → confirm/deny → full disclosure to a 24–48h standard. Commitments were bounded (what we will/won’t adjust) to avoid precedent risk; a post-vote 30/60/90 plan locked follow-through.
Enforced equity discipline and dilution optics
We set a burn/run-rate within peer-median bands and evidenced dilution trajectory across instruments; we defined offset tools (e.g., buyback overlays) and disclosed the path without handcuffing strategy.
Documented assurance and independence
We assembled CompCo minute packs, a counsel attestation cadence, and an evidence vault (tests for discretion, metric definitions, peer data, red-team artifacts). We did not set individual pay levels or run line processes; management executed, and we verified that board standards were met.
Results
Pre-file (draft → red-team → board draft)
Proxy-policy risk flags down ~45% versus the baseline draft; 100% of pre-filing hot spots remediated or transparently justified under the discretion rulebook. CD&A length reduced with a two-page at-a-glance adopted; readability improved; Pay versus Performance (CAP/TSR/net income) fully reconciled so tables, XBRL tags, and narrative told one story. Equity discipline evidenced: burn/run-rate at peer-median band, dilution trajectory documented; vesting front-load mitigated. Counsel attestations logged; parity-of-information controls held; zero disclosure defects.
File → AGM window (targeted engagement, simulations)
Segmented outreach completed to policy archetypes; vote models re-run after fixes showed uplift concentrated in top-12 holders. Chair/CompCo Q&A deployed; leak → confirm/deny → full disclosure drilled at 24–48 hours with zero correction filings. ISS/Glass Lewis policy concerns moderated in pre-meet dialogue; stewardship teams acknowledged guardrails (no-beta-pay, windfall screens, discretion tests).
AGM outcome
Say-on-pay support +14 percentage points versus prior year, driven by top-12 holders; no selective-disclosure incidents; meeting scripts held; tough-question responses referenced the published guardrails and evidence.
Post-AGM
All AGM commitments closed on schedule; discretion log published as planned; equity burn tracked within band; realizable pay vs. TSR inside policy corridors (no “beta pay”). Stewardship readouts captured; CompCo minute packs and the evidence vault updated for audit/regulatory comfort.
12-month cycle
Architecture held without one-offs; Pay versus Performance coherence sustained; overhang/dilution optics stable to improving; engagement shifted from “justify” to “monitor.” The board retained clear, repeatable control over pay-for-performance—management executed; the board governed; we verified at gates.
Why It Worked
