Tech stocks have struggled lately—$1 trillion in value got erased this month in just three days. But executive compensation at Silicon Valley’s top companies has never been higher.
This week, shareholders will get to tell three of the biggest players how they feel about that gap. On Wednesday, Facebook parent Meta, Twitter, and Amazon all hold their annual “say on pay” votes, and two influential proxy advisory groups—Institutional Shareholder Services (ISS) and Glass Lewis—are encouraging investors to offer a big fat thumbs-down.
Dodd-Frank requires companies to give their shareholders a vote on executive pay practices. Companies satisfy this requirement by disclosing the upcoming year’s pay packages at their annual shareholder meetings, then letting investors approve or reject them.
The votes’ utility is often criticized because the results are nonbinding, and companies do choose to disregard them. (Starbucks is a recent example.) But binding or not, investors haven’t traditionally seen executive compensation as so outrageous or untethered from reality that they routinely reject the proposals. They were approved last year for 2,933 companies on the Russell 3000 Index, which equals almost 98%, despite the recent uptick in scrutiny.
But the 67 rejections also marked a record high; and tech in particular has had an especially lousy few months—while the sector’s leaders seem almost entirely unaffected. Besides Tesla CEO Elon Musk and former Amazon CEO Jeff Bezos—the planet’s two richest people—there is Intel CEO Pat Gelsinger, currently the world’s highest-paid executive.
Speaking of whom: Last week, two-thirds of Intel shareholders voted down the company’s latest executive compensation package, including another massive compensation package for Gelsinger—$178 million. The chipmaker’s investors were encouraged by proxy advisers ISS and Glass Lewis to say no; and both firms are also urging investors to reject Amazon’s new executive pay structure, arguing that it’s definitely not aligned with company performance.
Bezos’s replacement, Andy Jassy, who stepped in as CEO last year, has been given a pay package that Glass Lewis calls “excessive,” including a one-time equity grant of $214 million in shares. Technically, they vest over a 10-year period, but they aren’t attached to any performance criteria—all Jassy has to do to earn all those shares is wait until 2033. Amazon contends that its executive compensation strategy “focuses on the true long-term success of our business.”
Meanwhile, Mark Zuckerberg and Meta’s top executives have taken a public lashing for pay increases amid growing worries of potential civil-rights abuses in the platform’s new metaverse. And, maybe most ironically of all, one of Musk’s mounting criticisms of the social media platform he wants to purchase is Twitter’s executive compensation. He’s promised to slash it, including dropping board pay down to $0.
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