Partner Eric Hosken explains that deciding on how likely is for a company to hit a performance target for an executive to receive a bonus is very different from deciding on total executive pay

Rose Marie Orens, a senior partner at Compensation Advisory Partners, talks about Jefferies Group Inc.’s plan to pay employees year-end bonuses in immediately available cash and the outlook for executive pay in the financial industry. She speaks with Erik Schatzker and Sara Eisen on Bloomberg Television’s “Market Makers.”

The voting, established this year by the Securities and Exchange Commission, was mandated by the Dodd-Frank Act to give shareholders a non-binding say in compensation packages for top executives at publicly traded companies. With the results tallied, compensation experts are finding that in practice, companies whose policies get a vote below about 80 percent – a “B” on the academic scale—are taking it as a sign of shareholder discontent.

Margaret Engel, a partner at New-York based consulting firm Compensation Advisory Partners LLC, called 80 percent “a developing threshold” for say-on-pay votes.

“On a gut level, it feels like a reasonable place to feel positive or less positive about the voting results a company gets,” Engel said.

Some financial firms fell short, with Goldman Sachs Group Inc.—whose plan doubled pay for chairman and chief executive officer Lloyd C. Blankfein—logging support from 73 percent of shares voted. Morgan Stanley came in close to the mark at 79 percent. Stephen Cohen, a spokesman for Goldman, and Mary Claire Delaney, a spokeswoman at Morgan Stanley, declined to comment on the significance of the results.

Most vote tallies have been in the “A” range, above 90 percent. Executive compensation at 78 percent of Standard & Poor’s 500 Index companies received approval from at least 80 percent of shares voted, according to a report by Compensation Advisory Partners.

Last-Minute Adjustments

Some companies have had to work hard, however, to hit the 80 percent threshold. General Electric Co. fell just shy of the mark with 79.5 percent even after last-minute adjustments to the compensation package for Chief Executive Officer Jeffrey Immelt. In the week before the vote, the Fairfield, Connecticut-based company tweaked the terms for 2 million options given to Immelt in 2010, linking them to the company’s performance.

“We viewed the results of GE’s say-on-pay vote favorably,” Andrew Williams, a company spokesman, said in a statement.

Of companies getting less than 80 percent in say-on-pay votes, 71 percent plan to put more effort into proxy voting season next year, according to a survey of 179 companies’ compensation officials by Towers Watson, a New York-based professional services company.

‘Bright Line’

“There’s a big uptick in activity for those who got less than 80 percent,” said Doug Friske, global head of Towers Watson’s executive compensation practice. “That seemed to be a bright line.”

Companies have gone directly to shareholders to explain compensation policies and have eliminated some special executive privileges, such as tax and travel benefits, Friske said.

The vote results will also affect future public statements. “Starting next year, companies will have to disclose whether or not they’ve considered the results in any of the actions they take,” Engel said. “They have to disclose how it’s influenced the process.”

A say-on-pay study by employees of New York-based Schulte Roth & Zabel LLP last month said “reasonable people can differ” on what makes a successful vote. “The data suggests that the percentage is well in excess of a majority,” said the paper, written by Michael Littenberg, a partner at the law firm, and associates Farzad Damania and Justin Neidig, who pointed to one view that the threshold may be from 75 to 80 percent.

Below 50 Percent

Companies that record particularly low marks—most of which are linked to perceptions of a pay-versus-performance disconnect—may be vulnerable to shareholder lawsuits alleging breach of fiduciary duty, the study said. Through June 17, directors at four companies receiving less than 50 percent support have been targeted by suits, according to the study, which did not name the companies.

About 2 percent of S&P 500 companies have so far reported majority rejections of their pay plans, including Hewlett- Packard Co., Stanley Black & Decker Inc. and Janus Capital Group Inc.

On the far end of the spectrum, companies such as Berkshire Hathaway Inc., MetLife Inc. and Apple Inc. racked up votes north of 98 percent.

Last year’s Dodd-Frank Act instructed the SEC to establish the say-on-pay rule as a response to public outrage over incentives that may have encouraged the kinds of high-risk trading that brought down Lehman Brothers Holdings Inc.

Companies were concerned about how these measures of investor sentiment might affect them, and proxy advisory firms weighed in to try to influence the outcomes.

“As it happened, most companies got really quite high positive support results,” Engel said. Even so, she said many have increased shareholder outreach. “I think say-on-pay voting has already been a catalyst for change.”

Friske said being evaluated like this could push company leaders to act.

“Most boards and senior managers are high achievers,” Friske said. “They’re not used to getting Bs or Cs.”