More than 37% of shareholders at the bio-pharma giant AstraZeneca voted against an $11m pay package for their CEO, Pascal Soriot.
After a 46% drop in operating profits in the first fiscal quarter of the year, shareholders didn’t think Soriot deserved a raise. So, they staged a so-called “shareholder revolt” — a move that’s becoming increasingly common in an era of runaway executive salaries.
CEO pay is on the rise
CEO salaries used to be hush-hush, but last year the SEC mandated disclosure. Today, the average CEO makes 127x more than their typical employee (an 11-year high), and at most of the largest companies, that gap is increasing.
Now, shareholders are slowly starting to hold them accountable, voting against bosses who get rich when their companies don’t.
Key word: Slowly
Two months ago, Disney shareholders voted to reduce their CEO’s salary, citing an “absence of growth.” Like Soriot at AstraZeneca, Disney CEO Bob Iger had already received a hefty (17%) pay decrease the previous year — but investors didn’t think it was enough.
In other cases, shareholders give the boss the boot when they screw up — like Uber last year when investors tossed ex-CEO Travis Kalanick off his rideshare pirate ship.
But, though shareholder shouting has gotten louder, it still rarely makes a dent in CEO wallets — in 2017, just 1.2% of S&P 500 companies succeeded in winning majority support to change executive payment.