Investor protests against the wages of American executives hit a record high

Investor protests over executive pay have reached an all-time high as anger deepens over packages that were rewritten during the pandemic to make it easier for chief executives to earn tens of millions of dollars.

On Thursday, Halliburton became the 13th S&P 500 company this year to gain less than 50 percent support for a paid vote at an annual meeting, according to data provider ISS Corporate Solutions.

The balance sheet of failures in 2021 marks the highest number since non-binding executive compensation votes were required by the 2010 Dodd-Frank Financial Reform Act. Twelve S&P 500 companies failed those votes “say-on- pay “in 2020.

With more than a third of S&P 500 companies scheduled to hold shareholder meetings in the coming weeks, the number of failed bonus votes is expected to increase.

“It’s very possible we’ll get 20 failed votes this year,” said Brian Johnson, executive director of ISS Corporate Solutions.

While votes are not binding, shareholder dissatisfaction with remuneration cannot be easily avoided. Companies that don’t pay votes tend to perform lower, Morgan Stanley said in a May 21 report. “Between 2015 and 2019, failed pay-to-pay votes were a material red flag for a lower-than-expected share price,” the bank said.

This year’s revolt against bonuses comes largely from the council’s 2020 decisions to rewrite long-term incentive plans to make it easier to meet performance targets, Johnson said.

As companies closed operations and assaulted workers last year, hundreds of business boards reinstated bonus plans to exclude the worst months of the pandemic’s economic success from bonus criteria or add new ones. bonus metrics to lessen the blow of a company’s battered share price.

Remuneration committee board members were to consider 2020 “almost like a two-period story,” said Betsy Atkins, a former board member who is on several boards, including Wynn Resorts and SL Green.

“There was January and February when the annual plan was approved and things seemed normal or strong, and then there was the pandemic,” he said. The committees in which he participates encouraged general executives to give up part or all of their salaries “to widen the cash track” when companies ’prospects were deeply uncertain.

But other wage plans were planned for a routine exorbitation. Intel, which did not vote on pay earlier this month, has offered new CEO Pat Gelsinger a $ 110 million pay package, according to Morgan Stanley.

Support for Starbucks executives ’pay fell to 47.5% from 84.5% the previous year. Chief executive Kevin Johnson has received two special bonds in recent years and was criticized for a maximum bonus of $ 50 million for being too large, Morgan Stanley said.

The failed payroll votes illustrate the changing attitudes of the world’s top asset managers. BlackRock, Vanguard and State Street said they had voted against some of the companies that did not vote this year. For example, State Street voted against Starbucks this year after supporting it in 2020.

“We’ve seen a dramatic change, especially this year, with large asset managers being more assertive and making it clear that quiet, behind-the-scenes engagement isn’t the only tool in the toolbox,” Richard Fields said. , partner in the law firm King & Spalding. “A sleeping giant has woken up.”