A record number of investors are rejecting executive compensation plans.
In non-binding votes of U.S.-listed companies this year, investors have rejected a record number of executive compensation plans, objecting to pay raises and the easing of performance targets coming out of the global pandemic.
News of investors rejecting executive compensation plans comes from an analysis carried out by consulting firm ISS Corporate Solutions.
Some companies have argued that protecting executive pay in a downturn is necessary to keep top managers incentivized, given the crucial role they play in steering their business. That idea has been increasingly met with skepticism from investors who say that the shifting of performance goalposts is unwarranted and demoralizes rank-and-file employees.
A record 14 S&P 500 companies had more than 50% of investors reject executive pay packages so far this year. That number is set to rise as more executives face votes in the coming weeks, according to ISS Corporate Solutions.
Investors voted down a total of 12 executive compensation plans in 2020.
The record was reached last week when 53% of shareholders invested in oilfield services firm Halliburton Co. (NYSE:HAL) voted down CEO Jeff Miller's $22.3 million U.S. pay plan, which is roughly $10 million U.S. more than he earned in 2019.
Cruise ship operator Norwegian Cruise Lines (NASDAQ:NCLH) also faced a defeat from its investors on executive pay plans, according to a securities filing. Investors this year have also rejected executive pay plans at General Electric (NYSE:GM), Starbucks (NASDAQ:SBUX) and Intel Corp. (NASDAQ:INTC)
Losing the shareholder vote can put pressure on corporate boards and executives to negotiate new pay deals. Two years ago, Walt Disney (NYSE:DIS)renegotiated the compensation of its chief executive officer at the time, Bob Iger, to toughen his performance targets after shareholders voted down his pay package.
ISS Corporate Solutions found that automobile and auto part makers, real estate firms and technology hardware and equipment companies changed executive compensation the most over the past year compared to other industries.
