Salesforce shareholders reject compensation plan for CEO and top executives

Salesforce CEO: A significant majority of Salesforce shareholders voted against the proposed compensation plan for CEO Marc Benioff and other top executives, according to a securities filing on Monday. This decision reflects growing shareholder discontent with executive pay amid broader concerns about the company's financial performance and strategic direction.

The resolution to approve the compensation plan garnered 339.3 million votes in favour but faced 404.8 million votes against it. The substantial opposition marks a notable rebuke of the executive pay structure at the software giant, which has been under increasing scrutiny.

For the 2024 financial year, Marc Benioff received $39.6 million in total compensation, a considerable increase from $29.9 million the previous year. This uptick in pay comes when Salesforce has been navigating a challenging business environment, characterised by weak client spending on its cloud and enterprise business products. This financial strain was evident when the company forecasted second-quarter profits and revenue below Wall Street estimates on May 29, leading to a more than 16 per cent drop in Salesforce shares after the bell.

The shareholder vote was influenced by recommendations from prominent advisory firms Glass Lewis and Institutional Shareholder Services (ISS), both of which advised investors to vote down the compensation plan. According to a CNBC report, these firms raised concerns about aligning executive pay with company performance and long-term shareholder value.

Glass Lewis criticised the plan for "excessive" payouts that are not sufficiently tied to the company's performance metrics. ISS echoed these sentiments, highlighting the need for a compensation structure that reflects the company's financial health and strategic achievements.
Salesforce has been under pressure to maintain its market leadership in cloud computing amid intensifying competition and evolving market dynamics. The shareholder revolt against the executive pay plan underscores the broader concerns about the company's strategic direction and financial management.

The company’s leadership now faces the challenge of addressing shareholder concerns while steering Salesforce through a period of economic uncertainty and competitive pressures. The rejection of the compensation plan could prompt a reevaluation of executive pay policies and greater engagement with shareholders to rebuild trust and ensure alignment with investor expectations.

As Salesforce continues to navigate these challenges, the focus will likely remain on how the company balances rewarding its top executives with delivering sustained value to its shareholders. The outcome of this vote signals a potential shift towards more stringent oversight of executive compensation practices in the tech industry.

With Reuters Input