Dive Brief:
- The vast majority of Kraft Heinz shareholders voted in support of having a say in executive compensation each year, according to a regulatory filing.
- The company reported that shareholders had voted in approval of an executive compensation plan in the results of the combined company's first annual shareholders meeting held last week.
- Kraft Heinz recognized the shareholders' demand and agreed to introduce executive compensation plans to shareholders for an annual vote.
Dive Insight:
In 2010, President Obama passed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act, which granted company shareholders the right to vote on executive pay, also known as "say on pay." Many analysts believed this would curb executive pay if that high level of compensation was not in shareholders' best interests. However, as of last year, executive pay on average had increased by about 12% per year since the law passed, according to The New York Times.
One explanation may be stock market performance. If a company stock is tanking but boards continue to lavishly pay executives, shareholders may be more inclined to intervene. But if a company's stock is on the rise, shareholders aren't as concerned with executive compensation.
Several major food manufacturers take shareholders' votes into account for executive compensation, such as ConAgra and Tyson. Coca-Cola's shareholders voted in approval of a controversial executive pay package last April, despite warnings from proxy adviser ISS that the compensation was not in line with company performance. This year, however, Coca-Cola CEO Muhtar Kent took a 42% pay cut, mostly from options and stock awards.