Salesforce investors have recently voted against the company’s compensation plan for top executives, citing concerns about the equity awards granted to CEO Marc Benioff. During the annual meeting, the resolution to approve the compensation plan received 339.3 million votes in favor and 404.8 million against. Shareholder advisory groups like Glass Lewis and Institutional Shareholder Services had recommended that investors vote down the measure due to the significant discretionary equity grants issued to Benioff.
For the 2024 fiscal year, Benioff received a total pay package of $39.6 million, an increase from $29.9 million in the prior year. While his salary remained the same at $1.55 million, he received additional stock and option awards, as well as nonequity incentive plan compensation. The compensation also included security fees that were previously not invoiced to the company. In January, Benioff was granted a second long-term equity award worth $20 million by the board’s compensation committee.
Glass Lewis raised concerns about the substantial discretionary equity grants issued to Benioff in January, stating that there was a lack of a fully convincing rationale behind the grants. They also mentioned that Benioff’s interests were already aligned with those of shareholders, making the additional performance-based restricted stock units and stock options unwarranted. Benioff already holds a stake of over 2% in Salesforce valued at close to $6 billion.
Nonbinding Vote
The vote from the annual meeting is nonbinding, but Salesforce’s board stated that they value the opinions expressed by their stockholders and will consider the outcome of the vote when making future executive compensation decisions. The company chose not to comment on the matter. Despite the disapproval of the compensation plan, Salesforce saw a 67% rise in shares in the 2024 fiscal year, with net income increasing significantly.
Salesforce reported a jump in net income to $4.1 billion in the fiscal year, up from $208 million the previous year. Revenue also saw growth, increasing by 11% to $34.9 billion. However, in January 2023, Salesforce announced layoffs of 10% of its employees after activist investors demanded a better mix of profit and growth. Salesforce also announced plans to begin paying a dividend to shareholders, showing a shift in strategy amidst investor pressure. As of now, Salesforce shares are down 2.6% year to date.
The battle over Salesforce’s compensation plan reflects the ongoing tensions between shareholders and executive leadership. While the company has seen significant financial success, investor concerns about executive compensation remain a point of contention. Moving forward, it will be interesting to see how Salesforce addresses these concerns and navigates the delicate balance between rewarding executives and appeasing shareholders.
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