2022 The 100 Most Overpaid CEOs (release). As You Sow and HIP Investor have done it again. Read it and weep. Then take action. Vote against these pay packages AND the compensation committee members. Also, vote for proposals aimed at disclosure and more equitable distribution of incentive shares. I filed several such proposals listed in the ICCR Proxy Resolutions and Voting Guide.
2022 The 100 Most Overpaid CEOs Lower Shareholder Returns
2022 The 100 Most Overpaid CEOs highlights repeat offenders. HIP Investor reports that between 2015 and 2020 the companies in the S&P 500 who were never on the list had an annualized total shareholder return (dividends plus stock appreciation) of 5.6%.
That significantly outshines (by a factor of two) the annualized return of just 1.95% for the nine companies that have repeatedly been on “The 100 Most Overpaid CEOs” list.
This performance gap, as detailed in Appendix F, equates to approximately $223 billion in shareholder value forgone.
Insiders Tilt Vote
Institutional opposition to overpaid CEOs is stronger than suggested by votes as reported to the SEC. As You Sow has used the level of shareholder votes against the CEO pay package as one factor in determining who the Most Overpaid CEOs are.
This year – as described more fully in “How we identify the 100 Most Overpaid CEOs” – As You Sow used, with the assistance of Proxy Insight and Insightia company, an analysis that excluded votes from shares controlled by management and others and instead measured only votes controlled by institutional fund managers.
Using these votes, the number of S&P 500 companies where the CEO pay package failed to get at least 50% of the votes more than doubled, going from 6 companies to 15.
CEO Pay Continues, Despite Growing Opposition
The number of financial fund managers who voted against the CEO pay package of at least half of the “100 Most Overpaid CEOs” in their investment portfolios reached 47. Pension fund opposition was even higher.
More shareholders are taking another step in calling for accountability by voting against members of the compensation committees. Yet, executive compensation continued to increase.
2022 The 100 Most Overpaid CEOs: Pandemic Reckoning?
What happens when performance criteria are not met? There are indications that executives may be insulated from bearing the full brunt of the downside though they are generally given full credit for the upside.
Some investors have already noted that they will evaluate the context of the pay packages, in light of how shareholders and employees have fared during the pandemic.
Rosanna Landis Weaver alerts to the opportunity to comment on the newly proposed SEC rules regarding disclosure of compensation and performance. See fact sheet. Comments are due March 4. As You Sow will be filing a letter, which she will blog about. Watch the video presentation. See also the AFL-CIO’s Paywatch page.
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