Among investors in the largest U.S. companies, no pay package is less popular than the one given to Bed Bath & Beyond Inc. Chief Executive Officer Steven Temares.
Only 23 percent of the shares of the housewares retailer were voted in support of its compensation plan at an annual meeting on July 1, the lowest level in the S&P 500 Index, according to data compiled by Bloomberg. Shareholders told the board that the CEO’s $19.4 million pay for 2015 was too high, and that his performance goals weren’t challenging enough, the Union, New Jersey-based company said in its May proxy statement.
New York Comptroller Scott Stringer, representing city pension funds, weighed in on the matter with a letter to Bed, Bath & Beyond investors. There’s a “gaping and persistent disconnect between CEO pay and company performance,” he wrote. The retirement funds, with $160 billion in assets, are among the company’s 60 largest shareholders.
Bed, Bath & Beyond, which sells everything from coffee to accent rugs, is reducing Temares’s target compensation by 14 percent for 2016 and is making his performance goals more rigorous, according to its proxy statement. Janet Barth, a spokeswoman, declined to comment beyond the regulatory filing.
Shareholder disapproval of Bed, Bath & Beyond’s pay practices contrasts with a falling number of businesses that fail in so-called say-on-pay votes. About 1 percent of S&P 500 companies have lost in their most recent non-binding votes, and the average support level is 93 percent, data compiled by Bloomberg show.
Temares’s 2015 package was his largest ever, even as shares fell by more than a third. His pay tops that awarded to Wells Fargo & Co. CEO John Stumpf and approaches that given to International Business Machines Corp.’s Virginia Rometty. The awards include a $4 million salary and $15.7 million in stock and options. That was an increase of about $1.1 million from his 2014 package. The exact amount of stock that 57-year-old Temares will receive may change depending on how Bed, Bath & Beyond performs against a group of 47 other companies on earnings and return-on-capital measures.
A University of Pennsylvania law graduate who primarily worked in real estate, Temares joined Bed, Bath & Beyond in 1992 before its debut on public exchanges to oversee property transactions as it expanded. Its footprint has grown to more than 1,500 stores from 62 two decades ago. He was promoted to CEO in 2003, earning a $931,000 salary during his first year in the top job.
Bed, Bath & Beyond’s pay plan also failed with investors last year. The company determined it would make some changes after contacting 25 investors representing 68 percent of shares, the chain said in the May 31 proxy.
Temares’s target compensation was reduced to $16.9 million for 2016 in a plan that will be voted on next year. His $4 million salary, the third-largest in the S&P index, will stay the same. He receives the large salary in lieu of a smaller one and a potential bonus, because “cash bonuses promote short-term thinking,” according to the filing.