New data shows big retailers have the cash to hire more workers and pay them well. They just spend it on stocks and CEOs instead.
A veteran executive compensation analyst provides potent ammunition for shareholder activists fighting to crack down on excessive executive pay.
If CEOs are capable of feeling shame, they do not want to wind up at the top of Rosanna Landis Weaver’s annual list of the “100 most overpaid CEOs.” As the head of the executive compensation program at the shareholder advocacy group As You Sow, Landis Weaver has become a leading namer and shamer of the country’s most undeserving chief executives.
Her 3rd annual ignoble list, released last week, fingers Les Moonves of CBS as the #1 most overpaid CEO in America. But it wasn’t just the media tycoon’s $57 million paycheck that put him at the top. Landis Weaver has developed an innovative approach to evaluating CEO performance that incorporates more than 30 factors, from traditional financial benchmarks to various indicators of long-term sustainability.
Landis Weaver skewers not only the overpaid CEOs and their unaccountable boards, but also the mutual and pension funds that continue to rubberstamp obscene executive pay packages. The heavily detailed report provides a wealth of information for shareholders aiming to crack down on runaway CEO pay.
Inequality.org co-editor Sarah Anderson sat down with Landis Weaver to talk about the new report and her thoughts on whether we’ll ever see an end to executive excess.
Inequality.org: How did you get into this line of work?
For many years I analyzed CEO pay practices for shareholder groups and labor union pension funds. When I heard about the job with As You Sow I was excited. It was an opportunity to use my nerdy executive compensation knowledge to actually advocate for better practices instead of evaluating what existed.
Inequality.org: Has “say on pay,” the provision in the Dodd-Frank financial reform law that gives shareholders the right to an advisory vote on executive pay packages, had much impact?
One thing we’ve found is that many of the companies with the worst pay practices are insulated from shareholder will in some way, for example if their shareholders only vote on pay every three years or if they have a dual voting structure, which gives certain shareholders greater voting rights. That suggests to me that companies which face shareholder votes may be making some changes. I also think some of the most egregious practices have been eliminated.
Inequality.org: What changes did you find in this report compared to your two previous ones?
When we did a year-over-year comparison on mutual and pension fund voting on executive pay packages, we found that all of the largest changes were with funds that increased their level of opposition. We are starting to see movement.
Inequality.org: In the course of your career, what would you say have been the most important shareholder victories on CEO pay?
Certain practices have been eliminated. I did a lot of work on the “tax gross-up,” a maneuver through which corporations basically reimburse their executives for tax obligations associated with an increase in their income. When I first learned about it, I was shocked. If the government decides to put extra tax burdens on an executive who got an excessive golden parachute, why on earth should shareholders pick up the bill? It never made sense to me. Now such “gross-ups” are mostly gone.
Inequality.org: Given the new political landscape in Washington, do you think shareholder strategies will become a more important tool for change?
We all learned in November how important voting is. Shareholders need to take the power of proxy voting seriously too. If you have a retirement fund, your shares are being voted. Are they voting for or against overpaid CEOs?
Inequality.org: What gives you hope?
I have seen changes, and they happen incrementally with many people working together. Change is threatening to some. I remember the many letters to the SEC that suggested Silicon Valley would collapse in a heap of rubble if they had to “expense” their executive stock options (i.e., account for the value of options in their financial statements). It didn’t work out that way in the least.
Inequality.org: When you’re not reading proxy statements, what do you do for fun?
Being with my kids. Baseball season starts for both my boys soon and I love that. Also reading things besides proxy statements, and gardening. I am very much looking forward to spring!