Investor grievances against US executive salaries have hit record highs

Investor grievances over executive salaries have reached an all-time high as fury deepens over packages rewritten during the epidemic to make it easier for CEOs to earn tens of millions of dollars.

Haliburton became the 13th S&P 500 company this year to garner less than 50 percent of its annual vote support, according to data provider ISS Corporate Solutions.

The list of failures in 2021 is the highest number since the non-binding votes of executives were required by the Dodd-Frank 2010 Financial Reform Act. S&P 500 Twelve companies failed such “paid” votes in 2020.

As more than a third of S&P 500 companies plan to hold shareholders’ meetings weeks in advance, the number of failed bonus votes is expected to increase.

“It is quite possible that this year we will be able to reach 20 failed votes,” said Brian Onson, CEO of ISS Corporate Solutions.

Although votes are not required, shareholders’ dissatisfaction with their salaries cannot be easily removed. Companies that do not pay for voting tend to underperform, Morgan Stanley said in a May 21 report. “The failed ballots during 2015-2019 were a significant red flag for underperforming the stock price,” the bank said.

This year’s rebellion against bonuses is largely driven by the 2020 council’s decision to rewrite long-term incentive programs to make performance goals easier.

Last year, companies shut down operations, laid off workers, and boards of hundreds of companies relaunched bonus plans to exclude the worst months of the economic downturn from the bonus benchmark or to add new bonuses to weaken the stock price shock.

Salary committee members had to look at 2020 as “almost a two-period history,” said Betsy Atkins, a former chief executive who sits on several boards, including Wynn Resorts and SL Green.

“It was January-February, when the annual program was approved, everything looked normal or strong, and then there was an epidemic,” he said. The committees he serves on encourage managers to give up part or all of their salary in part to “extend the cash flow” when companies’ prospects were deeply uncertain.

But other payment plans were pushed to the usual extravagance. Intel, which failed its payroll vote earlier this month, has offered new CEO Pat Gelsinger a $ 110 million payroll package, according to Morgan Stanley.

The salary support of Starbucks executives fell to 47.5% from 84.5% last year. CEO Kevin John Onson has received two special bonuses in recent years, with a maximum of $ 50 million being criticized for being too big, says Morgan Stanley.

Failed payroll votes show a change in the attitude of the world’s largest asset managers. BlackRock, Vanguard և State Street reported that they voted against some companies that did not pay for the vote this year. For example, State Street voted against Starbucks this year after supporting it in 2020.

“Especially this year we saw a sharp shift. “Larger asset managers were more assertive, realizing that silent, behind-the-scenes engagement is not the only tool in the toolbox,” said Richard Fields, a partner at King Law Firm. & Spalding “The sleeping giant woke up.”

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