Salesforce Shareholders Reject CEO Marc Benioff’s Compensation Plan

The issue of compensation packages for top executives in the technology industry is back in the news headlines, after the recent Elon Musk pay vote by shareholders.

CNBC reported that Salesforce shareholders have voted not to approve the compensation packages for the company’s senior executives, including CEO Marc Benioff, in defiance of a board recommendation.

According to a regulatory filing on Monday, the resolution to approve the compensation received 339.3 million votes in favour and 404.8 million against, at the annual meeting held last week (27 June).

Pay packages

According to the CNBC article, the shareholder vote is non-binding.

But it comes after shareholder advisory groups raised concerns about equity awards granted to Marc Benioff in January this year.

Indeed, two shareholder advisory firms, Glass Lewis and Institutional Shareholder Services, reportedly both recommended that investors vote down the compensation measure.

CNBC reported that for the 2024 fiscal year, Benioff received $39.6 million in total pay, up from $29.9 million in the prior year.

While Benioff’s salary was flat at $1.55 million, he received additional stock and option awards and non-equity incentive plan compensation, according to the proxy statement. The most recent sum also reportedly included security fees that had not previously been invoiced to the company.

In January 2024, the board’s compensation committee reportedly gave Benioff a second long-term equity award worth $20 million, in recognition of the company’s “successful transformation actions and strong financial performance in the fiscal year,” among other factors.

Glass Lewis wrote in its recommendation that “shareholders may reasonably be wary of the substantial discretionary equity grants” issued to Benioff in January, adding that there was a “lack of a fully convincing rationale” behind the grants.

It should be remembered that Marc Benioff is among the largest shareholders of Salesforce, with a stake of over 2 percent valued at close to $6 billion.

Glass Lewis reportedly said in its proxy paper that the additional performance-based restricted stock units and stock options were “unwarranted” because his interests were already aligned with that of shareholders.

Salesforce response

“Our Compensation Committee, which is responsible for designing and administering our executive compensation program, values the opinions expressed by our stockholders and will consider the outcome of this vote when making future executive compensation decisions,” Salesforce’s board was quoted as saying in the company’s proxy statement.

The company declined to comment to CNBC.

Salesforce in January 2023 had confirmed it would axe 10,000 jobs (or 10 percent of its workforce), and then it axed hundreds more jobs in January this year.

Last month the American CRM giant selected London for its first AI Centre – nearly a year after it had announced it would make a significant investment in the UK.