Salesforce recently faced backlash from investors over its compensation plan for top executives, particularly CEO Marc Benioff. The resolution to approve the compensation plan received more votes against than in favor at the annual meeting, despite the board’s urging for support. This highlight the concerns raised by shareholder advisory groups, Glass Lewis and Institutional Shareholder Services, regarding the equity awards granted to Benioff.
In the fiscal year 2024, Marc Benioff received a total pay of $39.6 million, a significant increase from $29.9 million in the prior year. While his salary remained flat at $1.55 million, Benioff received additional stock and option awards, as well as nonequity incentive plan compensation. The board’s compensation committee also granted him a second long-term equity award worth $20 million in January, citing the company’s successful transformation actions and strong financial performance in the fiscal year.
Both Glass Lewis and Institutional Shareholder Services raised concerns about the substantial discretionary equity grants issued to Benioff, questioning the rationale behind these grants. Glass Lewis specifically mentioned that Benioff was already one of the largest holders of Salesforce stock, with a significant stake valued at close to $6 billion. They argued that the additional performance-based restricted stock units and stock options were unnecessary since his interests were already aligned with shareholders.
The outcome of the vote at the annual meeting is nonbinding, meaning that the board is not required to follow the shareholders’ decision. However, Salesforce stated in their proxy statement that they value the opinions expressed by stockholders and will consider the vote when making future executive compensation decisions. Despite the controversy, the company declined to comment on the situation.
Salesforce shares rose by 67% in the fiscal year 2024, with a significant increase in net income and revenue. However, in January 2023, the company announced layoffs of 10% of its employees following pressure from activist investors demanding a better mix of profit and growth. Salesforce also recently announced plans to pay dividends to shareholders. Despite the positive financial performance, Salesforce shares have decreased by 2.6% year to date.
The controversy surrounding Salesforce’s compensation plan for top executives, particularly CEO Marc Benioff, highlights the tension between shareholder expectations and company decisions. The concerns raised by shareholder advisory groups reflect a growing trend towards more transparent and aligned executive compensation practices. It remains to be seen how Salesforce will address these issues moving forward and whether they will make changes to their compensation structure based on shareholder feedback.