Global Payments

Annual meeting 4/29/2020

The total disclosed compensation of Global Payments’ CEO Jeffrey S. Sloan increased to $20,502,096 in 2019. This 21% increase from his 2018 pay of $16,818,560 came despite significant levels of opposition to a pay increase from shareholders the prior year. It included a time-based restricted stock award of $14 million. In addition, in 2019, Sloan realized value of over $12 million through the exercise of stock options. One objection shareholders have to time-based restricted stock is that it can offer outsized rewards during a bull market even if the company is not performing any better than its peers.

Early in the proxy statement the company says it conducted an “expansive shareholder outreach program to gauge support for our executive compensation practices.” After this engagement the company concluded: “the general shareholder feedback we received indicated that our investors did not have significant issues with either our executive compensation program or the compensation mix of our Chief Executive Officer or any of our other officers.” This conclusion is striking given the high level vote against executive compensation.

At the company’s 2019 meeting, 22% of shareholders voted against executive pay at the company. The majority of S&P 500 companies had less than than 5% votes against. Global Payments notes that, “The feedback we received from shareholders regarding our executive compensation program was positive, and the vast majority of shareholders voted in favor of our program.” There were only six companies where the majority of shareholders voted against executive pay, so it seems like the company a clear majority should not be the standard. In fact, fewer than 50 S&P 500 companies had higher shareholder opposition to pay than Global Payments.

I do not know if the company checked in with the investors listed below, whose reasons for opposing last year’s vote are publicly available and collected by Proxy Insight. But I thought I’d post them, given that the company has not changed its practices. Here are what some of those investors gave as a rationale for opposition to the pay proposals.

Comments by Investors Opposed to Pay Package; Listed Alphabetically (Only Through C)

Aberdeen Standard Investments: We have concerns regarding the link between pay and performance. More than 40 percent of awards are time-based.

Achmea:  Amid mixed performance, CEO pay increased substantially, a large portion of which was in connection to an off-cycle, equity grant that brings the LTI mix to be majority time-based, which is not common practice among S&P 500 companies.

Aviva: Lack of performance related pay LTIs too short term focused. Poor disclosure. Poor performance linkage.

Axa: Remuneration Policy not aligned with long-term shareholder interests.

BMO Global Asset Management: A larger percentage of the equity awards should be tied to performance conditions. At least 50% is a minimum good practice. Furthermore, incentive awards to executives should be clearly disclosed and include robust and stretching performance targets to reward strong performance and drive shareholder value over a sufficiently long period of time. Moreover, the plan's structure and pay-for-performance results are not sufficiently strong.

BPF Schoonmaak: LTI performance shares utilize annual performance periods and the targets are not disclosed.

British Columbia Investment Management: We are voting against this advisory vote on executive compensation as the program is structured in a way that does not sufficiently align pay with performance and as there are features that are not in line with best practice.

Calvert Research and Management: The magnitude of CEO pay exceeds the 75th percentile of the company's peer group.

City of Philadelphia Board of Pensions & Investments: An assessment of the Company's performance and executive compensation amounts relative to peers as well as a review of pay related items such as dilution in stock plans, restricted stock grants, golden parachutes and tax gross ups reveals the program is problematic.

One final note, the median employee at Global Payments makes $46,763 and the pay ratio is 286:1.