Roger W. Ferguson, Jr. the CEO and President of the Teachers Insurance and Annuity Association of America (TIAA) had total disclosed compensation of $20,862,764 in 2019. This included a bonus of $6,520,000 and non-stock incentive plan compensation of $13,187,764.

I’ve written dozens of blogs on executive compensation on S&P 500 companies in the past few months and they all begin with a sentence something like this, though in some cases the pay was lower. TIAA is different than all the others. Since TIAA is owned by the TIAA Board of Overseers there are no institutional shareholders.

At public companies the vast majority of shares are held by institutional investors (including TIAA) who follow guidelines when making decisions on voting of compensation. These investors have available reams of analytical quantitative data to use in doing so. They also have the advantage of analyses by proxy advisory firms such as Institutional Shareholder Services (ISS). Of course, public companies have individual investors as well, and my blog posts are meant in part to offer them insight into problematic compensation plans as well as to highlight and supplement other. This vote is completely different from those.

In this case it is TIAA and CREF participants that have an important and under-utilized opportunity to voice their opinion on compensation at the company. ISS does not cover it. The votes are due July 10. If you are a member you probably received an email on June 5. If you did not, try contacting this website www.proxy-direct.com/edelivery .

In the years before the SEC required that public company shareholders be able to vote on executive compensation, many investors called on companies to adopt the practice voluntarily. TIAA was the first to voluntarily adopt a “Say on Pay” even though it was not mandated for the company to do so. Apparently, this was such a point of pride that when someone else got credit for being a first-mover they had the New York Times append a correction to the article.

At that point, the organization was known as TIAA-CREF. CREF stood for College Retirement Equities Fund. The entire company is now known as TIAA, though CREF is still a part of it. It has two different governing boards though both include the exact same people. It is a hot and confusing corporate governance mess, as can be seen on its website.

TIAA discloses that CEO Ferguson’s compensation is based on a number of factors, and one I want to focus on here is peer group. TIAA lists the “comparator group used in the market competitive analysis consists of the 18 asset management and insurance companies” that are used to help identify “market competitive compensation packages.”  As You Sow examined these peers that filed public documents and Ferguson’s pay was higher than most despite the fact that assets under management (AUM) were lower. For example, the CEO of T. Rowe Price is paid several million less, even though TIAA’s AUM is significantly less than that of T. Rowe Price.

Also striking to me is the reported median pay figure, which is disclosed as part of the pay ratio. The median employee is paid $141,476. The company discloses that it has a total of 16,629 associates. Thus, they have about 8,000 employees that are paid more than $150,000 a year. To me, this suggests a bloated compensation structure. For comparison, we once again looked at the peer list selected by the company: the median salary at TIAA-CREF was the third highest, coming in ahead of such companies as BlackRock, Ameriprise Financial, Bank of New York Mellon, Morgan Stanley and Invesco.

This seems vastly inconsistent with their non-profit heritage and the context of the client base they serve. In addition to serving most colleges and universities, TIAA provides services to small private schools and NGOs including Union of Concerned Scientists, Amnesty International, ActionAid USA, and National Public Radio.

One action TIAA performs on behalf of its participants is to vote on company proxy statements on a range of issues. Each year As You Sow does an annual report that identifies the 100 Most Overpaid CEOs and how funds vote on these plans. TIAA is more of a laggard than a leader in taking a stance against executive compensation, particularly when compared to pension funds, which may have similar constituencies. Last year TIAA voted against only 17% of the CEO pay packages. By means of contrast, the California State Teachers Retirement System (CALSTRS) voted against 43% of these companies. The Florida State Board of Administration, which covers all pension funds in the state of Florida, voted against 89%.

With median high pay so high, I cannot help but wonder if employees identify more with the wealthy than with professors. If one is paid several hundred thousand dollars a year for a job, one may opt to be less critical of the pay of executives.

TIAA participants are invited to offer additional commentary at this website https://www.tiaa.org/public/secure/proxy/exec_comp. Participants may wish to use this link to not just share concerns with excessive pay at TIAA but with TIAA’s unwillingness to challenge pay elsewhere.