Big Companies with Big Say-On-Pay Issues (2024 Shareholder Say-On-Pay Update)

by | May 22, 2024

The annual Say-On-Pay vote should be a total non-event from a shareholder and corporate governance perspective. It is simply too easy to overcompensate CEOs (and other executives) and still fall within a reasonable range by which shareholders won’t object. However, this proxy voting season we’ve already seen a number of disastrous Say-On-Pay votes that were unforced errors. Unfortunately for shareholders the vote is non-binding which means that the board really doesn’t have to care what shareholders think. Worse, it can often times be the case that even with repeatedly poor say-on-pay support from shareholders, boards can continue their executive pay practices with no real repercussions (see Netflix…).

I’ve argued before, both in print and at many conference cocktail hours, that there are very few CEOs that are so uniquely qualified that they should command such high executive pay premiums. The easy example is of course Elon Musk at Tesla (TSLA). Most would argue that from the beginning and now with such a high valuation that is based on Tesla being more than a “traditional” car company, he is uniquely able to sell the “big vision” to support it (whether or not he is actually able to deliver on it). An easy counter example is Dave Calhoun, Boeing’s soon to be ex-CEO. There is very little evidence that (a) he was worth such elevated pay ever, (b) as results worsened that he continued to be worth it (if he ever was), and (c) that paying him “only” $10 million (over $20 million less than they did) would have resulted in him leaving for greener pastures.

The typical say-on-pay vote will garner 90% or more support, so for this listing we wanted to highlight those with less than 80% support — a very meaningful signal of discontent. What you’ll see is that good performance alone doesn’t guarantee shareholders will green light executive compensation. And, even when shareholders appear to be generally happy with the board, based on shareholder support at re-election, they can have meaningful disagreements with them on pay. In those instances, we’d like to see more follow through a future shareholder votes where shareholders hold directors more accountable when pay practices aren’t materially improved.

Highlights

  • Norfolk Southern (NSC) CEO executive compensation plan received a disastrous 26.8% support FOR from shareholders. Ancora, which won 3 board seats in their fight, was right to point out to shareholders that NSC’s performance was an issue and a vote on Say-On-Pay is an additional way for shareholders to make their voices heard. And, in this case, it was certainly unclear to shareholders how a CEO that has delivered negative returns over their 2 year tenure should be receiving over $13 million in compensation.
  • I already mentioned Boeing (BA) above, but given the company’s performance, the fact that shareholders are giving the board any support on pay and re-election is disappointing. While the message may not be as strong as some would like to see, shareholders did put the board on notice by delivering a low 84% average support for director elections. Director David L. Joyce, the chair of the Aerospace Safety committee, bore the brunt of it receiving only 66% support.
  • Hock Tan, CEO of Broadcom (AVGO) tops the highest paid CEO list at $161.8 million in 2023. The vast majority of that pay is in equity with only about $1 million in salary. Despite his incredible run at AVGO, shareholders have real questions about pay as evidenced by the very low 63% say-on-pay support.
  • Fair Isaac (FICO) CEO Will Lansing has the company on a tremendous long-term run, but shareholders don’t agree that $66 million in 2023 compensation — up over 250% from 2022 and 2021 — compensation is the right pay day.
  • In a display of power held by the duopoly of proxy advisors ISS and Glass Lewis, BlackRock (BLK) received only 58% support from shareholders on its say-on-pay vote after both firms recommended against supporting the proposal.

 

Recent Reads

List of 2024 Say-On-Pay Disasters at Large Cap Companies

Vote FOR Pay Vote / Pay
Filing
Ticker Company 1/3/5
Yr TSR
CEO Pay Avg Director Rating Avg Vote FOR Directors Activist Vulnerability Compensation Consultant
26.8% View NSC NORFOLK SOUTHERN CORP 6%
-14%
21%
2023: $13.4M
2022: $9.8M
2021: $4.4M
C 65.7% HIGH Pay Governance
40.2% View ZBRA ZEBRA TECHNOLOGIES CORP 15%
-35%
86%
2023: $11.3M
2022: $4.2M
2021: $4.0M
C 93.8% HIGH Willis Towers Watson
45.0% View MMM 3M CO 30%
-31%
-9%
2023: $16.4M
2022: $14.0M
2021: $18.2M
C- 95.7% HIGH Aon, Frederic W. Cook, Willis Towers Watson
58.3% View FICO FAIR ISAAC CORP 82%
174%
374%
2023: $66.3M
2022: $18.9M
2021: $19.4M
A- 93.4% LOW Compensia
58.5% View CARR CARRIER GLOBAL CORP 56%
56%
2023: $17.7M
2022: $13.2M
2021: $14.9M
A- 98.2% ELEVATED Pearl Meyer & Partners
58.6% View BLK BLACKROCK INC 24%
3%
109%
2023: $26.9M
2022: $32.7M
2021: $32.6M
B- 97.4% LOW Aon, Semler Brossy
59.6% View TRV TRAVELERS COMPANIES INC 20%
45%
64%
2023: $22.7M
2022: $21.1M
2021: $19.9M
B- 94.7% LOW Frederic W. Cook
61.3% View AVGO BROADCOM INC 109%
233%
503%
2023: $161.8M
2022: $60.6M
2021: $60.7M
B+ 93.3% LOW Meridian
61.9% View BA BOEING CO -10%
-19%
-47%
2023: $32.8M
2022: $22.6M
2021: $21.2M
C- 84.1% HIGH Frederic W. Cook, Pay Governance
62.7% View CFG CITIZENS FINANCIAL GROUP INC 48%
-14%
32%
2023: $11.1M
2022: $11.7M
2021: $12.4M
C 97.3% HIGH Aon, Compensation Advisory Partners
63.0% View NLY ANNALY CAPITAL MANAGEMENT INC 20%
-19%
3%
2023: $15.3M
2022: $14.3M
2021: $9.1M
C- 97.2% HIGH Frederic W. Cook
63.5% View HEI HEICO CORP 22%
64%
112%
2023: $15.4M
2022: $9.1M
2021: $9.0M
A- 91.7% LOW
64.5% View AIG AMERICAN INTERNATIONAL GROUP INC 49%
67%
71%
2023: $24.6M
2022: $75.3M
2021: $21.9M
B 96.1% ELEVATED Pay Governance
65.4% View LVS LAS VEGAS SANDS CORP -22%
-19%
-16%
2023: $21.9M
2022: $11.4M
2021: $31.2M
C- 84.0% HIGH Korn Ferry
68.8% View TDG TRANSDIGM GROUP INC 68%
136%
255%
2023: $23.8M
2022: $18.7M
2021: $21.5M
A- 95.1% LOW Exequity
71.6% View RNR RENAISSANCERE HOLDINGS LTD 17%
51%
42%
2023: $23.6M
2022: $10.1M
2021: $8.9M
B- 96.2% HIGH Mercer
72.0% View PRU PRUDENTIAL FINANCIAL INC 53%
30%
54%
2023: $19.2M
2022: $20.1M
2021: $19.8M
C+ 95.9% HIGH Aon, Mercer, Willis Towers Watson
72.3% View ADI ANALOG DEVICES INC 16%
43%
144%
2023: $25.5M
2022: $22.1M
2021: $30.8M
B- 97.4% ELEVATED Pearl Meyer & Partners
74.7% View ENPH ENPHASE ENERGY INC -31%
-21%
679%
2023: $19.5M
2022: $16.6M
2021: $19.0M
A- 81.5% ELEVATED Aon, Compensia
75.0% View EMN EASTMAN CHEMICAL CO 26%
-10%
69%
2023: $17.6M
2022: $17.1M
2021: $17.8M
C 96.0% ELEVATED Aon
75.2% View HES HESS CORP 17%
96%
156%
2023: $16.8M
2022: $14.0M
2021: $12.4M
B 96.1% LOW Semler Brossy
77.4% View LUV SOUTHWEST AIRLINES CO -3%
-52%
-44%
2023: $9.3M
2022: $5.3M
2021: $3.0M
C- 95.8% HIGH Pay Governance
78.5% View DIS WALT DISNEY CO 13%
-40%
-22%
2023: $31.6M
2022: $24.2M
2021: $45.9M
C 90.6% ELEVATED Pay Governance
78.9% View HOLX HOLOGIC INC -8%
18%
66%
2023: $15.6M
2022: $14.3M
2021: $14.7M
C+ 94.7% ELEVATED Pearl Meyer & Partners
79.0% View LEN LENNAR CORP 45%
78%
234%
2023: $43.8M
2022: $34.9M
2021: $38.9M
B+ 94.4% LOW Frederic W. Cook
79.1% View ICE INTERCONTINENTAL EXCHANGE INC 29%
28%
81%
2023: $27.6M
2022: $16.7M
2021: $14.8M
B 97.7% ELEVATED
79.4% View NRG NRG ENERGY INC 156%
171%
171%
2023: $13.1M
2022: $10.2M
2021: $10.9M
B+ 96.1% LOW Pay Governance

 

 

 

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