Salesforce investors voted against the company’s compensation plan for top executives. The decision follows heightened scrutiny from shareholder advisory groups regarding substantial equity awards granted to CEO Marc Benioff.
According to a recent regulatory filing, the resolution to approve the compensation package garnered 339.3 million votes in favor and 404.8 million against during the annual meeting held on June 27, 2024. The board had strongly encouraged shareholders to support the resolution, but two influential advisory firms, Glass Lewis and Institutional Shareholder Services, recommended opposing it.
For the fiscal year 2024, Benioff’s total compensation rose to $39.6 million, up from $29.9 million the previous year. While his base salary remained at $1.55 million, the increase was attributed to additional stock and option awards, and non-equity incentive plan compensation. Notably, the recent sum included previously unbilled security fees to the company.
In January, Salesforce’s compensation committee awarded Benioff a second long-term equity award valued at $20 million. The committee cited the company’s “successful transformation actions and strong financial performance” as justification for the award.
However, advisory firm Glass Lewis expressed concerns over the “substantial discretionary equity grants” given to Benioff, pointing to a “lack of a fully convincing rationale” behind these grants. With Benioff already holding over 2% of Salesforce’s stock, valued at close to $6 billion, Glass Lewis argued that the additional performance-based restricted stock units and stock options were unnecessary, given his existing alignment with shareholder interests.
The outcome of the vote, although nonbinding, sends a clear message from the shareholders. Salesforce’s board stated in its proxy statement, “Our Compensation Committee, which is responsible for designing and administering our executive compensation program, values the opinions expressed by our stockholders and will consider the outcome of this vote when making future executive compensation decisions.”
Despite the dissent over executive pay, Salesforce has demonstrated strong financial performance. The company’s shares rose by 67% in the fiscal year ending January 31, 2024, marking the best performance since 2011. Net income surged to $4.1 billion from $208 million the previous year, while revenue increased by 11% to $34.9 billion from $31.4 billion.
The company has also made significant strategic moves, including the announcement in January 2023 to lay off 10% of its workforce following pressure from activist investors for a better balance between profit and growth. Additionally, Salesforce announced its plans to begin paying dividends to shareholders.
As of the current year, Salesforce shares have dipped 2.6%, reflecting the volatile market conditions and investor concerns over executive compensation practices.
