Most overpaid CEOs report shows income inequality

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CEO Pay Rises Faster Than Workers’ Pay Despite Investor Pressure and Lagging Financial Returns – 100 Most Overpaid CEOs Report Shows Continued Income Inequality and Low Accountability by Boards, Funds, and Pensions

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Q4 2019 hedge fund letters, conferences and more

BERKELEY, CA—FEB. 25, 2020—As You Sow today released its sixth annual The 100 Most Overpaid CEOs: Are Fund Managers Asleep at the Wheel? report, focusing on the nexus between overpaid CEOs of the S&P 500, and the failure of many pension and financial fund managers to hold companies accountable for excessive compensation.

Key Findings:

  • The level of shareholder opposition to excessive CEO pay continues to grow.
  • Many financial fund managers continue to improve their analysis and vote against more CEO pay packages each year.
  • The largest fund managers — particularly BlackRock — are total outliers in their voting on the issue of CEO pay. They opt to vote against only a very few of the CEO pay packages, and their votes are hard to understand.
  • Shareholder votes against CEO pay packages can encourage companies to make significant reforms.
  • Despite shareholder opposition, CEO pay continues to increase.
  • When company performance is considered, the most overpaid CEOs on the list are disproportionately overpaid.
  • The list of the 100 Most Overpaid CEOs contains many repeat offenders.

Quotes from Our Experts:

Rosanna Landis Weaver, program manager of executive compensation at As You Sow:

“There’s an increasing awareness that these CEO pay votes really do matter. Very smart people at a variety of funds are really digging deeply into this issue and revamping their proxy voting guidelines. After six years of our report, we see this trend has continued. Private conversations, known as engagements, are insufficient to deal with the systemic problems.”

Robert Reich, professor, author, and former U.S. Secretary of Labor:

“CEO pay at public companies is a significant contributor to income inequality, and it is one shareholders get to — and need to — vote on. New data show that at multiple companies, 100 employees working for a decade would not bring home what the CEO is paid in one year. Frontline employees should be entitled to larger packages. This explosion in CEO pay relative to the pay of average workers isn’t because CEOs have become so much more valuable than before. It’s not due to the so-called “free market.” It’s due to CEOs gaming the stock market and playing politics.”

Nell Minow, co-founder of Institutional Shareholder Services and vice chair of ValueEdge Advisors:

“Black Rock has responded to complaints from clients about the discrepancy between their rhetoric on climate change that their proxy votes. The revelations in this report show an even greater discrepancy between their promise that proxy voting is ‘strategically positioned as an investment function’ and their failure to look at big company pay packages with the same scrutiny they appear to bring to the smaller ones.”

BlackRock voted against more pay packages of CEOs who were paid less than $5 million than they did for CEOs paid more than $20 million.

R. Paul Herman, CEO and founder of HIP (Human Impact + Profit) Investor Inc., rating more than 128,000 investments for investors on people, planet, and trust:

“The 10 most overpaid CEOs as a group destroy shareholder value with negative returns for the worst decile of CEO pay — and the 100 Most Overpaid CEOs of the S&P500 under-perform financially for investors, relative to the benchmark index, on total shareholder return. This lack of accountability by boards to control CEO Pay, especially when financial performance lags, contributes to the investor revolts in action or brewing, and the overall investor and citizen frustration with growing inequality.”

Top 10 Most Overpaid CEOs:

  1. Mark V. Hurd & Safra A. Catz: Oracle Corporation
  2. Joseph M. Hogan: Align Technology Inc
  3. Robert  Iger: Walt Disney Company
  4. David M. Zaslav: Discovery
  5. Jeffrey K. Storey: CenturyLink Inc.
  6. Daniel H. Schulman: PayPal Holdings Inc
  7. Arthur Peck: Gap Inc.
  8. Stephen MacMillan: Hologic Inc
  9. Brian R. Niccol: Chipotle Mexican Grill Inc
  10. Giovanni G. Visentin: Xerox Corporation

*The pay packages evaluated were those where votes were cast prior to June 30, 2019. In some cases, CEOs presented here no longer hold that position. Oracle’s Mark V. Hurd is recently deceased.

To learn more about As You Sow’s work on CEO pay, click here


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About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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