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General Electric, AT & T Investors Refuse CEO Salary Plan

General Electric Shareholders Co., Ltd.

GE -2.45%

And AT & T Co., Ltd.

T 1.65%

A non-binding vote rejected a company’s executive compensation plan. The latest good companies have been criticized by investors for how they paid leaders during a pandemic.

Nearly 58% of GE GE -2.45%

Shares were voted against board compensation practices, according to the first tally released at the GE Annual Shareholders’ Meeting on Tuesday. The company said on Friday that less than half of the shares invested at the AT & T meeting last week supported the telecommunications and media giant’s compensation plan. Neither company has yet disclosed the full tally.

The two widely held shares have been added to the list of major US companies that have failed to gain shareholder support for this year’s executive compensation plan. Such advisory votes are non-binding and rarely lack the support of overwhelming shareholders.However, some institutional investors used them this year to complain to Starbucks. Co., Ltd.

And Walgreens Boots Alliance Co., Ltd.

Above all.

GE and AT & T executives won the Special Equity Award in 2020, best during a difficult time last year when a pandemic disrupted business, tested managers and sacrificed the work of millions of Americans. Became one of the wage business leaders. According to an analysis by The Wall Street Journal in April, the median CEO received $ 13.7 million in compensation in 2020.

Allianz Global Investors, an asset management firm, said the Stewardship Code has decided to vote against AT & T’s executive compensation plan. An Allianz spokeswoman said, “This rationale takes into account multiple one-off decisions by the Compensation Committee that raise concerns about performance-linked concerns.” “Payments for performance inferior to peers.” Long-term incentive payments also contributed to the decision, he added. ..

Shareholders voted against the compensation question at eight Russell 3000 Index companies. That’s about 4.2% of the companies that have voted so far this year. Compensation consulting firm Semler Brossy said in a report published last week. This is twice the rate of the same period last year. Of the 191 companies that have voted so far, the average approval rating for reward voting was 89% for Russell 3000 and 87% for S & P 500, both well below the average for this period last year.

Some votes are biased.At Park Hotels & Resorts Co., Ltd.

Eighteen percent of investors supported this year’s executive compensation plan, and 30% of the votes were cast in favor of the Marathon Petroleum salary plan. Co., Ltd.

, Companies disclosed in recent regulatory filings.

Jie Cai, a professor of finance at Drexel University who studies corporate governance and compensation, said the Covid-19 pandemic gives investors more information than usual about the quality of a company’s operations, at least during the crisis. It says that it was done. “Investors are getting more signal about what their manager’s skills are. They’re probably rewarding the good and punishing the bad,” he said.

Voting is not binding, but companies often respond to poor screenings by adjusting future wage practices, Kai said. “The promotion is bad,” he said. “There is definitely pressure on companies, especially on the board.”

According to Securities Filing, GE Chairman and CEO Larry Calpe received $ 73.2 million worth of compensation from a Boston-based company. During the summer, GE’s board of directors revised the CEO contract, extending it until 2024, and at the end of 2020 awarded Mr. Calpe a special share grant worth over $ 100 million. Mr. Calpe then voluntarily abandoned his $ 653,409 salary. Covid-19 attacked and rejected his cash bonus that year.

GE’s vote came after a campaign against compensation voting, in which acting advisors Glass Lewis and Company and Instituteal Shareholder Services encourage investors to withhold support.

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Investment management firm Neuberger Berman argued that if performance targets were relaxed during the pandemic, Calpe’s wages should have been reduced, and he said he would refrain from supporting Calpe’s contract extension in advance. I warned. “When performance targets are lowered, potential payment levels should be lowered,” said Caitlin McSherry, director of investment stewardship at the company.

The money manager said the vote did not reflect a lack of trust in Mr. Calpe. “We see rally leadership as an important element of GE’s ability to successfully turnaround,” said McSherry. “It was the right decision to extend his time at the company.”

At the meeting on Tuesday, GE’s lead director, Tom Houghton, answered questions about compensation changes and upheld the board’s decision. At the beginning of the pandemic, it became clear that GE’s turnaround would take longer than originally planned, and Mr. Horton moved the board to secure Mr. Calpe’s leadership until 2024.

At the time, the board saw the move as an extension, but also discussed how the new share grant would be seen as re-pricing his performance-based goals.

“The Board believed that ensuring the rally was in GE’s best interests and our responsibility as the Board so that it could continue to drive GE’s transformation.” Said Houghton. “If the largest number of shares are acquired in 2024, it means that all shareholders have benefited.”

A spokeswoman for the GE board said it would take shareholder votes into account when assessing the compensation program.

AT & T veteran John Stanky at the WarnerMedia event in late 2019.


Photo:

Presley Ann / Getty Images

At AT & T, CEO John Stanky and WarnerMedia Chief Jason Killer collected $ 21 million and $ 52.2 million in compensation in their first year of employment, respectively. Many of Killer’s packages reflected stock incentives that would be paid over the years.

Randall Stephenson, who was CEO of AT & T until the end of June and chairman until January, was paid $ 29.2 million.

AT & T said the compensation program aims to attract and retain executive talent, taking into account shareholder feedback in drafting salary plans. In a statement, AT & T Chairman William Kennard said, “While further engaging with owners on this important topic, the board will carefully consider today’s advisory vote and ensure that our approach to compensation continues to reflect these principles. I will do it. “

The Dallas-based company said about 49% of its shareholders voted to approve executive compensation, but did not provide other details about the vote.

Both GE and AT & T fell below a wide range of markets last year. GE’s total shareholder returns in 2020 were minus 2.7%, while AT & T was minus 21%. The S & P 500 Index recorded a total return of 18.4% in 2020.

Write to Thomas Gryta (thomas.gryta@wsj.com) and Drew FitzGerald (andrew.fitzgerald@wsj.com)

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General Electric, AT & T Investors Refuse CEO Salary Plan

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