Just a short diary to note that my organization is hosting a webinar tomorrow and you’re all invited:
The 100 Most Overpaid CEOs 2016:
Are Fund Managers Asleep at the Wheel?
Webinar Date: 02/17/16 at 1:00pm PT / 4:00pm ET
We did this report last year too and posted about it afterwards. I called the diary 50 Shades of Pay. Don’t have a flashy title this year. Too late and too tired
This year I’m posting ahead of time to give you the link so you could join us.
Because I’m posting prior to the publishing of the report I can’t name names, but you can find them out tomorrow.
When I was hired at As You Sow I was given the assignment of identifying the 100 Most Overpaid CEOs in the S&P 500. Now, like most of you, I pretty much think they are all overpaid. The system is broken. But to write a credible report I had to come up with a list and ranking. It wouldn’t be enough to simply list them by amount. I have some expertise on this and talked to lots of other knowledgeable folks and came up with a list of over 30 things that I thought were red flags, many of which I mentioned in last year’s diary. There are a few that are new this year.
The reason for coming up with this list was to get a better understanding of proxy voting. We talk a lot about voting on this site but this form gets very little attention: the votes shareholders cast on directors, shareholder proposals and other matters at a company’s annual meeting. Since Dodd Frank shareholders can vote on an advisory basis on whether they think CEO pay is okay at a particular company. Part of the rational for creating our overpaid list was to come up with a framework to examine who voted yes and who voted no on some of the very worst packages.
A survey came out of Stanford last week that showed how powerfully opposed to excessive CEO pay most people are.
Here’s a quote from the release: “74 percent of Americans believe that CEOs are not paid the correct amount relative to the average worker. Only 16 percent believe that they are. While responses vary across demographic groups (e.g., political affiliation and household income), overall sentiment regarding CEO pay remains highly negative.”
The same survey showed that the negative attitudes were based on the wrong numbers. Most people surveyed had badly underestimated how much CEOs were paid.
Why then do CEO pay packages get such high approval ratings when they come up for votes? Most of them get support of 90% or more. I’ve heard compensation consultants give speeches in crowded conference rooms showing that these votes mean investors are happy.
But I’m an investor, and I’m sure not happy with this allocation of resources. Like most investors though I invest through my 401ks. I expect them to vote on my behalf and in my long-term interests. Do they? Well it depends on which fund you are invested in. There’s a pretty astonishing range actially. If you are interested join us Weds. afternoon.