Salesforce investors recently voted against the company’s compensation plan for its top executives, with concerns being raised about the equity awards granted to CEO Marc Benioff. Despite the board’s recommendation to approve the compensation plan, shareholder advisory groups like Glass Lewis and Institutional Shareholder Services advised investors to vote against it. The resolution received 339.3 million votes in favor and 404.8 million against at the annual meeting, prompting further scrutiny.
For the fiscal year 2024, Benioff received a total pay package of $39.6 million, marking an increase from $29.9 million in the prior year. While his salary remained unchanged at $1.55 million, he received additional stock and option awards, as well as nonequity incentive plan compensation. The recent sum also included security fees that had previously not been invoiced to the company. Furthermore, Benioff was granted a second long-term equity award worth $20 million in January, citing the company’s successful transformation actions and strong financial performance as reasons for the award.
Both Glass Lewis and Institutional Shareholder Services expressed concerns about the discretionary equity grants issued to Benioff, with Glass Lewis specifically mentioning a lack of a fully convincing rationale behind the grants. Benioff, who already holds a significant stake in Salesforce, was deemed to have aligned interests with shareholders, making the additional performance-based restricted stock units and stock options appear unwarranted. The nonbinding vote from the annual meeting has put Salesforce’s compensation practices under scrutiny.
Company Response and Performance
In response to the investor vote, Salesforce’s board stated that the Compensation Committee values the opinions of shareholders and will consider the outcome when making future executive compensation decisions. Despite the controversy surrounding executive pay, Salesforce saw a considerable rise in its share price, with a 67% increase in the 2024 fiscal year. Net income also experienced a significant jump, reaching $4.1 billion compared to $208 million the year before. While revenue increased by 11% to $34.9 billion, the company faced criticism in January 2023 when it announced plans to lay off 10% of its employees.
The recent backlash from investors regarding Salesforce’s executive compensation package highlights the ongoing debate surrounding fair pay practices for top executives. As shareholder advisory groups continue to scrutinize companies’ compensation decisions, it remains to be seen how Salesforce will address the concerns raised and whether it will make any adjustments to its executive pay structure in the future.
Leave a Reply