Massive paydays for tech CEOs could face investors’ wrath

Shareholders of some of the world’s largest technology companies will vote next week on compensation for top executives, as influential advisory services urge them to fight massive paydays.

“Tell about payment” votes are scheduled for Wednesday on Inc. AMZN,
+ 0.19%,
Facebook parent company Meta Platforms Inc. FB,
and Twitter Inc. TWTR,
+ 1.19%,
as part of the annual shareholders’ meetings of these companies. The votes are advisory and non-binding, but give investors a chance to share their feelings about the executive pay of some of the world’s most famous tech companies, something they’ve already done this proxy season.

About 66% of Intel Corp. INTC,
Shareholders voted against the chip maker’s executive salary structure last week, including $ 178 million in compensation for CEO Pat Gelsinger, according to a presentation to the Stock Exchange Commission this week. Investors from other tech companies seeking to speak out against strong executive compensation have the backing of shareholder advisory firms Institutional Shareholder Services, or ISS, and Glass Lewis, which are asking Amazon investors to vote against the company’s executive compensation program, saying that executive pay is not aligned with performance.

Amazon’s new CEO Andy Jassy, ​​who was promoted last year after the company’s founder Jeff Bezos retired as CEO, received a capital grant of $ 214 million. dollars. Jassy’s stock grant is for 10 years, starting in 2023, but ISS noted in its representative document that the company’s compensation program is based entirely on time, it has no performance criteria. pre-established and it is unclear whether Jassy will continue to receive additional capital. awards over the next decade.

“Shareholders should be concerned about this year’s disconnect between payment and performance driven by one-off awards in 2021, including $ 214 million.
mega-grant to the new CEO, “Glass Lewis wrote in his proxy research report.

Since last year: Amazon investors reject New York retirement fund call for racial equity audit

Consulting firms also expressed concern over capital awards to two other Amazon executives, Worldwide Consumer CEO David Clark (nearly $ 57 million) and Amazon Web Services CEO Adam Selipsky ( about $ 82 million).

In its proxy, Amazon said it has explained to investors its philosophy of linking executive salaries to long-term performance. The company said “a small minority of investors” disagree with its approach.

ISS also recommends that investors vote against Facebook’s parent company’s executive compensation program, saying Meta seems to determine compensation at the discretion of the board committee; that their incentive programs have no objective metrics revealed or quantified targets; and that other appointed executives “receive very important capital awards that have no performance acquisition criteria.”

ISS also claims that the security costs of the company’s top two executives, CEO Mark Zuckerberg ($ 25.3 million in 2020; $ 26.8 million in 2021) and Chief Operating Officer Sheryl Sandberg ( $ 8.5 million in 2020; $ 11.3 million in 2021), are “excessively large.” ”And keep going up. Zuckerberg had a $ 1 salary in 2021, and the only other compensation for him was security costs, which included a $ 10 million pre-tax personal security bonus that he can use as as appropriate, as well as $ 15.2 million in security costs for the company. Sandberg’s compensation in 2021 was $ 35.3 million, which included a nearly $ 1 million salary, a $ 850,000 bonus, and $ 22.2 million in stock awards.

In his proxy, Meta said his practices focus on paying for performance. The company also said that the security costs of its top executives are necessary due to their high profiles, and that travel costs for both Zuckerberg and Sandberg were higher in 2021 due to their travel increases. personnel and an increase in security personnel costs.

See also: Uber and Lyft face shareholder push to reveal how much they spend on fighting new labor laws

ISS and Glass Lewis also recommend that investors vote against the executive compensation program on Twitter, although the company has a pending deal that will be private to Tesla Inc. TSLA,
CEO Elon Musk who could question the votes or actions of shareholders at the meeting.

The two consulting firms expressed concern over a $ 12.5 million single grant to Twitter’s new CEO, Parag Agrawal, who took over in November, replacing Jack Dorsey. ISS noted that the capital grant is based on time and not performance.

In addition, both companies mentioned that Agrawal received another $ 12.5 million grant that appears to be based on incentives, along with an annual salary of $ 1 million. Glass Lewis said in his proxy document that while acknowledging that the disconnect between pay and performance may be affected by a CEO transition, “given the value of the awards given and their impact on the full compensation granted for 2021, we remain concerned about the company ‘s payment practices “.

Equilar estimated that Agrawal would receive $ 42 million if he was fired within a year after a change of control of Twitter.

In its proxy, Twitter promoted executive compensation programs “designed to link the results of awards to the achievement of financial and performance results, as well as the performance of our shareholders.”

See also: Elon Musk, Jeff Bezos, and other major billionaires lose nearly $ 200 billion in 2022

Investors also vote against payment packages beyond the technology sector. Only 31% of JPMorgan Chase & Co.’s JPM,
investors voted in favor of the company’s executive compensation program this week, according to a transcript of its annual meeting. General Compensation Jamie Dimon’s compensation for 2021 was $ 84.4 million, which included a $ 52.6 million options award that was framed as a “retention bonus”.

The Wall Street Journal reported this week that, according to Equilar, 23 S&P 500 companies have so far received less than 70% support for their executive compensation programs.

Dieter Waizenegger is the CEO of SOC Investment Group, which, among other things, aims to hold corporations accountable for overpaying executives. He said SOC advocates moving away from performance-based incentives, “which can be played too easily and, in turn, return to a model of fully time-valued rewards.” He also said members of the compensation committee of corporate boards should be held accountable “when it is clear that the board is supporting unwarranted executive payment packages.”

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