[ad_1]
U.S. executive bonuses have received low support from investors this year, following moves to release performance targets that were pushed back into the pandemic by the board.
By 2021, shareholder support for U.S. executive bonuses is the lowest since 2011, the year in which “say pay” votes were mandatory, according to payroll data company Equilar. This year, the average support for payment packages has dropped to 87.6 percent from its highest of 91.8 percent in 2015.
This year the S&P 500 companies (including General Electric, AT&T, IBM and Starbucks) have not gotten the most shareholder support for payment packages. According to ISS Corporate Solutions, it compares to 10 cases in 2020 when a majority of shareholders voted against the company’s bonus plan.
Some asset managers said they expected this year to see a record number of salary votes for S&P 500 companies. In the case of Russell 3000 companies, the rate of failure of payroll votes in early May was higher than in 2020 and 2019, the ISS said.
BlackRock, the world’s largest asset manager, doubled its vote against America’s executive salary proposals in the first three months of 2021 compared to the previous year, according to a report released last week.
More companies are at risk of failing to pay votes as the U.S. annual meeting season progresses in the coming weeks. The IAC Group, Barry Diller’s media and the Internet conglomerate have presented obstacles before the company’s May 14 meeting in the face of executive bonuses from representative consulting firms.
Altria, the maker of Marlboro cigarettes, and Union Pacific, also a railroad group, are at risk of losing payroll votes in the coming weeks, Morgan Stanley reported last week.
“Last year there was a pandemic and perhaps increased awareness of layoffs and pay against general suffering,” said Lisa Edwards, president and chief operating officer of Diligent, a corporate governance software provider.
The bonus study is “likely to stay fairly high,” Edwards said, adding that failed payroll votes “could be the beginning of a trend.”
While these payment votes are advice, they are not binding, they can be detrimental to businesses. From 2017 to 2019, most companies that failed to pay votes had fewer than the S&P 500 and their industry peers, Morgan Stanley said.
In addition, investor investors have failed to pay votes “like blood in water,” said Lawrence Elbaum, a partner at Vinson & Elkins.
“A bad saying about the pay vote is one of the clearest initial warnings that an entrepreneur will knock on your door because they see that shareholders are upset,” Elbaum said.
Many of this year’s notable salary reactions are changes to bonus plans designed by executives to ensure tough bonuses in pandemic stock market declines.
According to the analytics data company and the Conference Board, more than 100 S&P 500 companies have recovered bonus plans for executives as a result of the pandemic.
At the Walgreens Boots Alliance, a pharmaceutical chain, executives rewrote a long-term bonus plan to isolate their pay from business ups and downs caused by Covid-19. Asset manager Vanguard, who voted against Walgreens ’payment packages, said the company would have to present a“ strong reason ”for the bonus changes. About 53% of Walgreens shareholders voted against the bonus.
GE management also tried to rewrite bonuses during the pandemic. New CEO Larry Culp’s new contract reduced the price of the shares that would win the bond shares and nearly doubled the share he would receive. The payment could be a maximum of $ 230 million in sales if it stays in the company as early as 2024. GE shareholders rebel above the salary paid at the company’s May 4 meeting.
“When you give someone a $ 230 million withholding tax you can’t be terribly surprised that you’re going to increase investor anger,” said Marc Hoda, a partner at Farient Advisors, an executive compensation consulting firm.
Union Pacific will vote “say in return” at its annual meeting on May 13 and remove the worst months of its business’s pandemic from its executive performance targets. With the second quarter of 2020 removed from the executive bonus plan, Union Pacific CEO increased by about 10 percent since 2019, Morgan Stanley said.
“It’s interesting that discretion and how adjustments are made are not symmetrical,” said Simiso Nzima, corporate governance director and director of CALPERS. Bonuses are never reduced when companies take advantage of positive economic forces outside the control of executives, he added. “You can’t have two modes”.
While they may complain about executive payments, investors tend to protect management because they believe large bonuses are needed to retain executives and because leadership transitions can hurt the company’s share price.
But the pandemic has highlighted pay gaps that are hard to ignore, said Allison Binns, the capital strategist at Morgan Stanley, who said the mere payout on votes could herald a lasting change in investor behavior.
“It’s likely to be a catalyst for a recovery in wages,” Bins added.
[ad_2]
Source link
