The Advisors' Blog

This blog features wisdom from respected compensation consultants and lawyers

June 24, 2021

Pay-for-Performance Doesn’t Always Please Everyone

In an unusual twist, last week a company announced voting results from its annual shareholder meeting and said it considered all items of business with the exception of its say-on-pay proposal. Some investor advocates are unhappy with the CEO pay package and the company said shareholders should have more time to consider the say-on-pay vote. Here’s an excerpt from the company’s press release:

Based on requests from shareholders for additional time, the independent members of the Activision Blizzard Board believe it is in the best interest of its shareholders to extend the opportunity for shareholders to vote on this important matter, and therefore recommended an adjournment to allow additional time for shareholders to submit proxies with respect to the [Say-on-Pay] Proposal. The 2021 Annual Meeting will be reconvened on Monday, June 21, 2021 at 9:00 a.m. Pacific Time (the “Reconvened Annual Meeting”). The sole matter of business before the Reconvened Annual Meeting will be the [Say-on-Pay] Proposal.

The company’s press release details certain recent statements about its executive compensation practices that it believes were misleading. The Board members believe that obtaining informed shareholder feedback related to Activision Blizzard’s compensation policies and practices is of fundamental importance, and therefore, allowing additional time for shareholders to meaningfully participate in the vote better represents their interests.

This unusual development ruffled the feathers of some investor advocates and they were speaking out about it. This case might add more fodder to the discussion about whether pay-for-performance is the way to go with compensation because in this case, it doesn’t appear to be pleasing everyone. Activision’s press release says it decreased the CEO’s base salary and cash bonus and made most of the CEO compensation performance based. With that, MarketWatch reports that 54% of shareholders approved Activision’s say-on-pay proposal. Stock awards made up the bulk of the CEO’s compensation and the value of the company’s stock rose and outpaced the S&P 500 last year.

– Lynn Jokela