Although there’s a slight deviation in median pay in the 80-90% range, the overall trend is that of high median CEO compensation paired with low Say on Pay approval. Median CEO pay was around $17 million for companies that fell under 50% approval. This exemplifies that high pay continues to be a matter of concern for shareholders. Though some companies did lower compensation, the data suggests that shareholders may still view it as too high. It is important to note that though shareholders’ reluctance to approve high pay is not a new phenomenon, zooming in on individual companies provides insight into COVID’s role in intensifying this effect.
One failure this year, Starbucks, shows just that. In 2020, Starbucks paid its CEO $14 million, a drop from $19 million in 2019. Starbucks received a 47% vote this year compared to a passing 84% vote last year, despite the lower pay. AT&T witnessed a similar event, failing its vote regardless of an $11 million drop in pay. Walgreens Boots Alliance joined in with CEO pay roughly $1.6 million lower than last year but over a 35 percentage point drop in approval. Though various factors are possibly at play, it’s likely that the pandemic heightened shareholders’ criticism of unnecessarily high compensation. It seems natural that, with economic uncertainty, shareholders are more willing to express disapproval if companies aren’t bearing their share of the burden.
Though annual shareholder meeting season is ongoing, monitoring these results paints a solid picture of the changing relationship between shareholders and companies. It’s too early to decide whether companies have done enough to curb high compensation, but if the failure rate continues, the answer may become clear. This past year will unveil if a period of great uncertainty can change shareholders’ level of acceptance and affect real change in historically high levels of C-suite compensation.
