Following JP Morgan, Intel and Coca-Cola CEOs Face Backlash Over Compensation Plans...

Pat Gelsinger, Intel Chief Executive Officer (CEO)
Photo by Reuters

[Asia Economy Reporter Hyunjin Jeong] Large-scale compensation plans for top executives of major U.S. companies, including Jamie Dimon, Chairman of JP Morgan, Pat Gelsinger, CEO of Intel, and James Quincey, CEO of Coca-Cola, are facing consecutive opposition from shareholders.

The Wall Street Journal (WSJ) reported on the 19th (local time) that as of now, 23 companies have received less than 70% approval for CEO compensation plans at this year’s annual shareholder meetings. Generally, CEO compensation plans receive approval rates well above 90%, so a rate below 70% indicates significant opposition. This number has increased from 21 last year, and among the 23 companies, 7 have had CEO compensation approval rates below 70% for two consecutive years.

In the U.S., a law was enacted in 2011 requiring publicly traded companies to explain CEO compensation plans to shareholders. Although the shareholder vote at the annual meeting is not binding on whether compensation is paid, the board of directors, which makes the final decision, takes shareholder reactions and concerns into account, potentially influencing outcomes. Sarah Mahaffy, ESG strategist at RBC Capital, stated that investors emphasizing ESG (Environmental, Social, and Governance) issues have made thorough scrutiny of CEO compensation practices part of a broader trend.

Companies with low approval rates at this year’s shareholder meetings include JP Morgan, Intel, Coca-Cola, and General Electric (GE). JP Morgan and Intel faced strong opposition with approval rates of only 31% and 34%, respectively, while Coca-Cola’s approval rate dropped significantly to 50.5% from 94% a year ago. GE recorded approval rates below 70% for two consecutive years.

Jamie Dimon, Chairman of JP Morgan, was set to receive $52.6 million in compensation, including a special bonus. This compensation was created last year to retain Dimon at the company until 2026. Pat Gelsinger, CEO of Intel, who returned to Intel in February last year, was set to receive a compensation package worth $178.6 million, designed to vary based on performance and stock price increases over the next five years. According to WSJ, James Quincey, CEO of Coca-Cola, and Larry Culp, CEO of GE, were set to receive $24.9 million and $22.7 million, respectively.