Most CEOs fail at attempts to reduce their salaries. Can Tesla’s Elon Musk do the same?

This year, most bosses have failed in their attempts to cut salaries.

The question now is whether Tesla CEO Elon Musk can do the same.

According to ISS-Corporate, a separate firm from the ISS unit that recommends voting for or against such proposals, only two companies out of 340 that held shareholder votes on CEO pay as of June 6 saw their pay packages drop. leaders rejected.

This 0.6% failure rate is lower than any full year since 2020, when pay denials ranged from 2% to nearly 5% of all companies with such votes.

No 2024 pay vote has garnered more public attention than the June 13 vote at Tesla, where shareholders will decide whether the boss can keep a record $56 billion in compensation that was awarded in 2018 then canceled this year by a vote in Delaware. judge.

Critics say compensation is excessive should be rejected, given that it eclipses last year’s highest U.S. CEO salary 300 times and would dilute shareholder value. It received the support of 73% of Tesla’s independent shareholders when it was initially granted six years ago.

Tesla CEO Elon Musk will face a critical shareholder vote on June 13 on his compensation. (Jordan Strauss/Invision/AP) (Jordan Strauss/Invision/AP)

Leading proxy advisors ISS and Glass Lewis recommended shareholders vote against the pay package. One of the major shareholders, billionaire Ron Baron, argued for approval because Musk “earned his salary.”

Musk might find some comfort in the fact that many CEOs have managed to keep their pay packages intact so far this year, despite some misgivings.

This increased shareholder satisfaction with executive compensation comes as compensation continues to rise. The median salary for S&P 500 CEOs increased from $14 million in 2022 to $16 million in 2023.

It may seem counterintuitive that support for these “advisory vote” proposals will be so low in 2024 amid historically high executive compensation, said Stephanie Hollinger, vice president of ISS-Corporate.

“One possible explanation is that, unlike the previous two years where the pandemic caused a shift in traditional compensation practices, fewer issuers made one-time awards and other discretionary adjustments in 2023,” Hollinger said.

Two companies where CEOs have retained their salaries despite aggressive challenges are financial management firm BlackRock (BLK) and pharmaceutical giant AstraZeneca (AZN).

Larry Fink, CEO of BlackRock. (Reuters/Shannon Stapleton) (Reuters/Reuters)

About a third of AstraZeneca shareholders opposed an 11% salary increase as well as performance-based benefits for CEO Pascal Soriot. Soriot’s compensation, which reached $23.5 million in 2023, had been confronted opposition from ISS and Glass Lewis, as well as institutional investors, over the past few years.

At BlackRock, the vote was much closer. Only 58% of shareholders voted in favor of rewards for CEO Larry Fink and other executives.

The same is not true at 3M (MMM) or Zebra Technologies (ZBRA), the rare examples of companies…

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