High compensation does not always equate to high performance, report by As You Sow finds.
CEO pay at many of the biggest companies in the U.S. has snowballed over the past decade to levels hundreds or even thousands of times higher than median salaries — and in a lot of cases, the higher compensation isn't reflected in financial performance.
That applies to the financial services industry, which represents nearly 10% of all the companies named in As You Sow’s 100 Most Overpaid CEOs report issued Wednesday.
Among those included in the annual paper from the shareholder advocacy group: AIG, Marsh McLennan, Bank of America, JPMorgan Chase, PNC Financial Services, Ameriprise, Globe Life, Travelers and BlackRock.
Financial services “is an overpaid sector in general,” said Rosanna Weaver, director of wage justice and executive pay at As You Sow. “I rarely accept the argument that ‘we need to pay well to get the [talent].’”
Increasingly, investors appear to be recognizing that, often voting against pay packages at S&P 500 companies where CEOs get tens of millions in compensation every year. Financial services is somewhat of an exception, however, with shareholders “more inclined than they should be to support pay,” Weaver said.
While “say-on-pay” votes have been going on for more than 10 years — a result of the Dodd-Frank Act — their results are nonbinding. The results can put pressure on corporate boards to make changes, as directors who fail to rein in executive pay can be voted out.
Over the past five years, companies have had to disclose the ratio of CEO pay to that of their median-paid worker, a requirement put in place by the Securities and Exchange Commission under Dodd-Frank.
AIG CEO Peter Zaffino, for example, had $75.3 million in compensation as of the most recent fiscal year, or 894 times the median salary at the company of $84,240, according to data compiled by As You Sow. Two-thirds of shareholders voted against Zaffino’s pay. The CEO was named as the fourth most overpaid on As You Sow’s list.
In 22nd position was Marsh McLennan CEO Daniel Glaser, whose $30.9 million in compensation was 454 times that of the $68,138 median salary at the firm. Just over a third, 34%, of shareholders voted against Glaser’s pay package.
Meanwhile, Bank of America CEO Brian Moynihan’s $30.2 million in pay was 258 times the median $177,040 salary at the firm, with 31% of shareholders voting against the compensation level.
Shareholders were much more approving of JPMorgan Chase CEO Jamie Dimon’s $34.8 million, 393 times the median $88,730, with just 10% voting against it.
PNC CEO William Demchak took home $19.5 million, or 276 times the $70,695 media salary at the bank, with 20% of shareholders disapproving.
Ameriprise CEO James Cracchiolo’s salary, at 183 times the median $125,033, with a total of $22.8 million, was voted down by 18% of shareholders.
Globe Life co-CEOs Gary Coleman and Larry Hutchison, at $17.8 million, took home 283 times the median $62,883 salary, with the figure rejected by 16% of votes.
Meanwhile, 14% voted against Travelers CEO Alan Schnitzer’s $21 million pay package, which was 194 times the median $108,583 salary.
But shareholders were much more receptive to BlackRock CEO Larry Fink’s pay of $32.7 million, or 212 times the median $154,312 at the firm. Just 8% of votes were against his pay, according to As You Sow.
InvestmentNews emailed all the financial firms whose CEOs were included in the list, but none provided comments.
The 10th iteration of the shareholder advocate's report put the average pay of the 10 most "overpaid" CEOs at $88 million, up from $56 million in the first report 10 years ago. The group names CEOs as overpaid based on the level of their compensation relative to company financial performance, as well as other factors. While the average S&P 500 company earnings were 8.5% between February 2015 and September 2023, that figure was 7.9% among the 100 companies on the list, according to As You Sow.
“In a year marked by labor strikes that use vast pay disparities to measure how workers are undervalued, investors and companies alike can use this tool to hold executives to higher standards of individual and corporate performance moving forward,” the organization said in an announcement of the report.