General Electric, AT&T Investors Reject CEO Pay Plans
04 Mai 2021 - 7:23PM
Dow Jones News
By Thomas Gryta and Drew FitzGerald
Shareholders at General Electric Co. and AT&T Inc. rejected
the companies' executive compensation plans in nonbinding votes,
the latest blue-chip companies to be rebuked by investors over how
they paid leaders during the pandemic.
Nearly 58% of GE shares were voted against the board's
compensation practices, according to an initial tally announced at
the GE meeting Tuesday. Less than half of shares cast at AT&T's
annual meeting on Friday supported the telecom and media giant's
compensation plans, the company said. Neither company has disclosed
full tallies yet.
The two widely held stocks join a growing list of big U.S.
companies that have failed to garner shareholder support for their
executive compensation plans this year. Such advisory votes are
nonbinding and rarely fail to win overwhelming shareholder support.
But some institutional investors have used them this year to also
voice their displeasure with Starbucks Corp. and Walgreens Boots
Alliance Inc., among others.
Executives at both GE and AT&T received special stock awards
in 2020 that made them among the highest-paid business leaders last
year, a difficult period when the pandemic disrupted business,
tested managers and cost millions of Americans their jobs. The
median CEO received compensation of $13.7 million in 2020,
according to a Wall Street Journal analysis in April.
Larry Culp, GE's chairman and CEO, received compensation valued
by the company at $73.2 million, according to securities filings.
Over the summer, the GE board revised the CEO's contract, extending
it until 2024 and awarding him the special stock grant that was
valued at more than $100 million at the end of 2020. Mr. Culp
voluntarily gave up his salary after Covid-19 struck and also
declined his cash bonus. His salary for the year was $653,409.
The GE vote came after a campaign opposing the compensation vote
with proxy advisers Glass Lewis & Co. and Institutional
Shareholder Services recommending investors withhold their
support.
At Tuesday's meeting, lead GE director Tom Horton answered
questions about the compensation change and defended the board's
decision. At the beginning of the pandemic, it became evident that
GE's turnaround would take longer than initially planned, Mr.
Horton said, and the board moved to secure Mr. Culp's leadership
through 2024.
At the time, the board viewed the move as an extension, he said,
but also discussed how the new stock grant might be viewed as a
repricing of his performance-based goals.
"The board believed it was in GE's best interest and our
responsibility as the board to secure Larry so he can continue to
drive GE's transformation," Mr. Horton said. "If the maximum number
of shares are earned in 2024, it will mean all shareholders will
have benefited."
In its report, Glass Lewis criticized the targets and incentives
in the contract extension. "The revised award provides Mr. Culp
with the same amount of compensation in dollars for creating less
shareholder value" than his original employment agreement, the
report said.
A spokeswoman for the GE board said it would take the vote into
consideration as it evaluates its compensation program.
At AT&T, CEO John Stankey and WarnerMedia division chief
Jason Kilar collected compensation valued at $21 million and $52.2
million, respectively, during their first year on the job. Much of
Mr. Kilar's package reflected stock awards that would pay out over
several years.
Randall Stephenson, who served as AT&T chief executive until
the end of June, when Mr. Stankey took over, and was replaced as
chairman this past January, had compensation valued at $29.2
million.
AT&T said its compensation program aims to attract and keep
executive talent, though it has also relied on shareholder feedback
to draft its pay plans. "As we further engage with our owners on
this important topic, the Board will carefully consider today's
advisory vote to ensure that our approach to compensation continues
to reflect these principles," AT&T Chairman William Kennard
said in a statement.
The Dallas-based company said about 49% of shareholders voted to
approve its executive compensation but didn't disclose other
details about the vote.
Theo Francis contributed to this article.
Write to Thomas Gryta at thomas.gryta@wsj.com and Drew
FitzGerald at andrew.fitzgerald@wsj.com
(END) Dow Jones Newswires
May 04, 2021 13:08 ET (17:08 GMT)
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