Salesforce investors recently voted against the company’s compensation plan for top executives, citing concerns about equity awards granted to CEO Marc Benioff. Despite the board’s recommendation to approve the compensation plan, the resolution received 404.8 million votes against and only 339.3 million votes in favor at the annual meeting.
For the 2024 fiscal year, Benioff received a total pay package of $39.6 million, up from $29.9 million in the previous year. While his salary remained flat at $1.55 million, he received additional stock and option awards, as well as nonequity incentive plan compensation. The proxy statement also indicated that the sum included security fees that had not been previously invoiced to the company.
Shareholder advisory firms Glass Lewis and Institutional Shareholder Services had recommended that investors vote against the compensation plan. Glass Lewis specifically raised concerns about the “substantial discretionary equity grants” issued to Benioff, questioning the rationale behind such awards. They also argued that the additional performance-based restricted stock units and stock options were unwarranted, given Benioff’s already significant stake in the company.
While the vote from the annual meeting is nonbinding, Salesforce’s board stated in the proxy statement that the Compensation Committee would consider the outcome when making future executive compensation decisions. The company did not provide any further comment on the matter. It is important to note that Salesforce shares have performed well in the 2024 fiscal year, with a 67% increase, and the company reported a significant jump in net income and revenue.
In January 2023, Salesforce announced plans to lay off 10% of its employees following pressure from activist investors to improve the balance between profit and growth. Additionally, the company stated in February that it would start paying a dividend to shareholders. Despite these positive developments, Salesforce shares are currently down 2.6% year to date.
Overall, the controversy surrounding Salesforce’s executive compensation highlights the ongoing debate over equitable pay practices and the alignment of executive interests with those of shareholders. The dissent from investors and the recommendations from shareholder advisory firms indicate a growing scrutiny of executive pay packages, particularly when there is perceived to be a lack of transparency or justification for the awards granted. As Salesforce continues to navigate these challenges, it will be crucial for the company to address investor concerns and ensure that its executive compensation practices are in line with shareholder expectations.