Investors who hold nearly two-thirds of JPMorgan Chase & Co and Intel Corp. did not support the payment plans at recent annual meetings. The Coca-Cola Company won a majority support this year with barely 50.5% of the vote.
Historically, it is unusual for companies to receive less than 90% support on these votes, and corporate-governance analysts consider less than 70% support to indicate significant investor dissatisfaction.
So far, 23 companies in the S&P 500 have reported less than 70% support for their executive-compensation programs, compared to 21 among similar companies a year ago, an analysis of nearly 250 companies found compensation-data firm Equilar. had gone.
Seven blue chips came in below 70% for the second year in a row, including General Electric Co.
According to an annual analysis by The Wall Street Journal, the average salary package for CEOs of S&P 500 companies in 2021 was $14.7 million, the sixth straight record. Stock rewards, whose value can rise or fall, account for the bulk of compensation, particularly for the highest-paid leaders in the Journal’s 2021 rankings.
The investigation into executive compensation practices is part of a broader trend as investors focus on environmental, social and corporate-governance—or ESG—issues, said Sarah Mahafi, ESG strategist for RBC Capital Markets. His firm estimates that $1.4 trillion in assets globally is managed by stock funds that place great emphasis on ESG criteria when making investment decisions.
Nine CEOs received salary packages of at least $50 million last year, compared to one in 2016, according to the Journal’s analysis. Such unusual or large one-time rewards are attracting more attention, said Caitlin McSherry, director of investment management at investment firm Neuberger Berman. “It’s something that shareholders will be looking for more, the philosophy around the one-time award,” she said.
In JPMorgan, 31% of shares were voted in favor of the bank’s pay plans after investors objected to a $50 million retention bonus for CEO Jamie Dimon. Including the special bonus, Mr. Dimon’s 2021 compensation totaled $84.4 million, putting him among the highest-paid CEOs in the S&P 500 for the year. (See the full WSJ ranking.)
The bonus is in options that require the shares to trade above certain levels and for Mr. Dimon to remain CEO until 2026. The bank and directors said the award was to make it clear that Mr Dimon would continue in his position for many more years.
Institutional Shareholder Services Inc. and Glass Lewis & Co., two firms that advise shareholders on voting, both recommended voting against the pay package, because of a retention bonus and a small grant to Daniel Pinto, president and chief operating officer. The ISS said the rewards were not tied sufficiently to the bank’s performance. The vote is not binding, and Mr Dimon is not expected to return the special award.
“Pay on Pay” votes have been mandatory for large US-listed companies since 2011 and are purely advisory. Still, most boards respond to poor performance by campaigning for their concerns to major investors and often by changing pay packages.
At the annual shareholder meeting on May 12, more than a third of Intel’s shares supported the company’s executive pay policies. Last year, 38% did.
Intel replaced CEO and brought in Pat Gelsinger in February 2021. The company offered him a salary package of $178.6 million for 2021, much of it in stock and option awards that are vested over three to five years and dependent on growth in its share price.
Intel said the stock awards were based on Mr. Gelsinger’s experience, the challenge of leading a turnaround and forfeiting nearly $50 million of equity awards from his previous job. Intel said Mr. Gelsinger’s 2022 target would drop total direct compensation to $26.3 million, though his actual salary package could be larger or smaller depending on the company’s performance.
An Intel spokesperson said the company has taken steps to address investor feedback on the compensation, although “there is clearly more work to be done.” He said 73% of Mr. Gelsinger’s equity awards are performance-based.
At Coca-Cola, shareholder support for its executive-pay program fell sharply, falling from 94% a year earlier to 50.5%.
ISS said the company did not adequately explain a special award for CEO James Quincy, which is valued by the company at approximately $3.2 million. Mr Quincy received a salary package of $24.9 million in 2021, up 35% from a year earlier. The ISS also criticized Koch’s decision to pay $9.3 million in cash and consulting fees to the company’s former general counsel.
Coca-Cola declined to comment.
Nearly two-thirds of GE’s shares were voted on to support its pay program this year, up from 42% in 2021. Last year investors criticized special equity awards for top executives during 2020, including a stock grant for CEO Larry Culp, which the company initially valued. at $57.1 million.
This year, ISS said the company has proven responsive to shareholders’ concerns by reducing Mr. Culp’s 2022 target equity grant and promising not to adjust performance measures for equity awards already made. GE pegs Mr Culp’s salary package at $22.7 million in 2021, a 69% drop from 2020.
“Overall, we thought the company really made an effort to listen to shareholders – it took some steps to be held accountable,” said McSherry of Neuberger Berman.
The ISS again recommended a “no” vote, saying that the company’s proxy statement provided little information about the $5 billion adjustment in determining whether the company met performance goals, This led to an increase in executive pay. The ISS also called the decision to measure something. Performance criteria in one year instead of three for some equity awards.
A GE spokesperson referred to the company’s securities filing, which said the company had met with investors holding 52% of its shares outstanding and that shareholders were highly supportive of Mr.
This story has been published without modification to the text from a wire agency feed