Advisory Group Urges Shareholders To Reject Caterpillar’s CEO Pay Package
ISS Proxy Advisory Group also suggests to not allow director Juan Gallardo, to be re-elected.
An advisory group has called upon Caterpillar’s (NYSE:CAT) shareholders to turn down a request by the management to execute the executive compensation policies, in a note issued by ISS Proxy Advisory Services ahead of the annual general meeting in June. By the same breath, the Rockville, Md. advisory firm has also urged shareholders to also put their vote against the re-election of the construction and industrial conglomerate’s directors, Juan Gallardo.
This is the latest in a series of corporations providing handsome compensation packages to CEO’s despite lagging performance. Advisory groups for companies, such as BP and JPMorgan, have urged their shareholders to reject the pay packages for their respective CEOs — Bob Dudley and Jamie Demon. This on top of big bank bosses, who managed to get away with large pay packages, falling in line with bank growth and toxic effects from the Great Recession resulting in many bank runs and failures.
The ISS has pointed to Caterpillar CEO, Douglas Oberhelman, has received an increased total compensation of more than $17 million, despite putting the company in a period of lagging returns. Even worse, most of the targets that were to be achieved were lowered from the 2013 targets, and despite the downward revision, the company was only able to provide marginal increase in profitability.
ISS is not alone though. CWS Investment Group, a branch of the US union federation dubbed as ‘Change to Win’, had early last month also urged the shareholders to reject the compensation policies. It argued that the company improved its earnings per share due to stock repurchases, which reduced the number of outstanding shares valued at more than $4 billion, double that in 2014, and falls flat in the face of Caterpillar’s claim in its proxy letter to shareholders that emphasis of cost stabilization management and operational execution helped its boost earnings last year.
On the other hand, official has pointed to Mr. Gallardo struggling to juggle his job on serving on boards of more than three different companies, imperative to relieve him of his duties to focus on his other boards in Mexico. On that end, Caterpillar mentioned in its proxy letter that Mr. Gallardo’s experience in international business, particularly in Latin America, is very imperative for the company’s growth strategy for the next few years.
CAT stock price ended the day at $85.32, a gain of more than 0.10% the previous day.