Rhode Island will be voting against more compensation packages for corporate executives if the pay is not aligned with company performance, state treasurer Seth Magaziner announced today.
"At a time when income inequality has grown to alarming levels in our country, investors like the pension fund should not be paying enormous salaries to corporate executives at companies that are performing poorly," said Treasurer Magaziner. "Executive compensation must be closely tied to long-term performance and structured in a manner that keeps corporate executives accountable to investors, including members of our pension system."
Each year, publicly-traded companies ask shareholders to vote on items that are pending on their annual proxy ballots. Shareholders are asked to vote on a range of issues, including the approval of boards of directors, advisory votes on proposed executive pay packages, as well as on shareholder proposals concerning environmental, social and governance issues.
During the past year, Rhode Island voted against executive compensation proposals at dozens of companies, including IBM, Aflac, and American Express, where proposed pay packages were not justified by company performance.
The State Investment Commission yesterday unanimously adopted a stronger executive compensation voting policy going forward, specifying that the Rhode Island will oppose executive compensation when:
- CEO pay is more than 4 times the average pay for the company's other top executives.
- Performance-based pay is less than 50 percent of total CEO compensation.
- CEO pay is in the top 25 percent of peer companies, but performance is below average.
- More than 4 percent of the company's outstanding shares are paid to a CEO.
Treasurer Magaziner's 2018 Shareholder Engagement Review, along with information on proxy voting can be found at: www.treasury.ri.gov/shareholderengagement
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