Vanguard opposed CEO compensation at Alphabet, Uber

September 15, 2020. Print article

Group revealed on Tuesday that it voted against compensation of top executives at Uber and Alphabet this year, arguing their pay did not adequately reflect the tech companies’ performances.

The world’s largest mutual fund manager said in a new report that U.S. tech company Alphabet, which owns Google, misaligned “pay and performance” in its shareholder proposal for executive compensation. This was the third year that Vanguard voted against executive compensation at Alphabet.

The Pennsylvania-based asset manager said it had raised similar questions about ride-sharing company Uber’s proposal, which included an “excessive and misaligned” retention award for its CEO with a one-year vesting period.

The report released Tuesday is a sign of increased effort by the fund manager to promote environmental, social and governance-related objectives using its shareholder votes. ESG-related investing and investment objectives in the asset management space have proliferated recently as investors seek to use their money to influence social causes. Vanguard said it promotes executive compensation that is tied to long-term company performance and uses “appropriate incentives” to better align with the interests of shareholders.

Despite Vanguard’s opposition, both compensation proposals were approved by their respective investors this year. About 75% of Alphabet shareholders voted in favor of the company’s proposal in June, and about 71% of Uber shareholders voted the same in June. 

Alphabet CEO Sundar Pichai and Uber CEO Dara Khosrowshahi were respectively paid $242 million and $42.4 million last year.

The asset manager participated in many more proposals with some of the world’s largest companies, according to its report. It said that Vanguard’s investment stewardship unit engaged with 793 companies to vote on more than 168,000 proposals between July 2019 and June 2020.

Many proposals pertained to issues of company governance — including board composition, shareholder rights and oversight — while others focused on environmental commitments and diversity reports, the firm said. 

Vanguard also named John Galloway as its new global head of investment stewardship on Tuesday, following his three years on the team. He is succeeding Glenn Booraem, who led the team since its founding in 2001 and will remain a senior advisor, Vanguard said.

“As corporate governance remains an area of change and importance, Vanguard’s Investment Stewardship team will drive improvement across our portfolio,” Galloway said. “Over the coming months, we will make clear our expectations for board and workforce diversity, climate change risk, and will engage with companies to better understand how COVID-19 has shaped their views of systemic risk.”