Four of the nation’s largest companies, together representing nearly $109 billion dollars in total revenues, have settled shareholder resolutions filed by the state of Connecticut and others that asked the companies to release detailed disclosures on executive pay-setting.
Connecticut Treasurer Denise Nappier, principal fiduciary of the $26 billion Connecticut Retirement Plans and Trust Funds, is a leading advocate of corporate executive compensation that reflects company performance. Because of shareholder proposals filed on behalf of CRPTF this proxy season, retailer Abercrombie & Fitch and supermarket conglomerate Supervalu Inc. have agreed to disclose information relating to gaps in pay among top executives.
Shareholder agreement was also reached with printer R.R. Donnelley & Sons and the construction equipment manufacturer Caterpillar Inc.; both companies will disclose the relationship between compensation consultants engaged by their boards of directors and any additional work done for management.
The CRPTF was the primary filer for all four resolutions and was joined by the AFL-CIO Reserve Fund and the New York State Common Retirement Fund on the Caterpillar proposal.
Each company agreed to comply with a series of policies and disclosures relating to executive pay levels, prompting Nappier to withdraw shareholder proposals which would have otherwise been considered at the companies’ annual meetings this spring.
One proposal filed at both Abercrombie and Supervalu asked each company to adopt policies on internal pay equity, which is the relationship between compensation received by the chief executive officer and that received by other named executive officers.
“Large gaps in pay between the chief executive officer and other NEOs may signal that the CEO is earning an excessively large share of the compensation paid to top executives or that the pay is not tied to performance, and this is rightly of concern to shareholders,” Nappier said in a statement. “It may also be a red flag for inadequate succession planning, as wide pay differentials sometimes reveal significant differences in contribution and ability and this, too, is troubling.”
