Dividends and Top US index fund companies largely backed overpaid CEOs in 2019:study

Every year public companies have annual meetings where shareholders can and do attend to vote, to ask questions, to listen and mix and mingle with senior officers from the company. If you do not attend you can send your proxy. In the news because it is reality, many Presidents receive a very generous salary and benefits when compared to the rank and file workers. At the annual meeting, setting the President’s salary and benefits is a shareholder question.

According to an article by Ross Kerber of Reuters, the two largest US index funds (Blackrock and Vanguard) rarely voted against the President’s salary and benefits. In a study by As You Sow, a shareholder activist organziation, Blackrock and Vanguard voted against shareholders pay question Vanguard and Blackrock voted against the President’s salary and benefits 8 to 10% of the time.

In Europe the situation is different as BNP Paribas Asset Management opposed pay packages termed excessive 91% of the time up from 69% the previous year. The big German company Allianz Global Investors numbers were 93% and 78% in the near future.

Executive pay is an issue because in 2018, the most overpaid CEO’s received $14.5 million versus the rank and file ratio 287% to 1. The company with the worst record is Oracle.

Linking to dividend paying stocks, as the stock market changes, from individuals to institutions to hedge funds to passive index funds, the nature of passive indexing suggests the companies will often take management’s recommendations. The writer was in one annual meeting where the normal vote was 95% in favour and a non management vote was in the 70%, still well within the range to pass.

There are more questions than answers, til the next time – to raising questions.

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