Halliburton: Defensive Supplemental Filing Unlikely to Convince Shareholders

Annual Meeting May 18

Halliburton Chairman and CEO Jeffrey Miller’s total compensation for 2021 was $23,591,982.

On May 9, Halliburton issued a supplemental filing with the SEC, responding to ISS’s recommendation to vote against compensation committee members for what they deemed “limited responsiveness” to shareholder concern.

ISS also recommended against the advisory vote on pay in large part due to a 19.9 percent increase in the value of the executive’s long term incentive. The company’s argument can be read in full in the supplemental filing but it is unlikely to be sufficient to appease shareholders. The company’s primary defense is that ISS’s analysis does not give sufficient weight to the appreciation of Halliburton’s stock price around grant time. Shareholders are unlikely to be swayed by this argument.

The company has made a series of changes due to shareholder frustration with excessive pay over the years. This year’s changes included adding a DEI metric to annual incentive and “moving grants of restricted stock from December to January to align with grants of performance units.” What the company has not changed is the overall quantum of pay which remains high. 

Here are some of the concerns raised last year by shareholders:

“The company also increased the target opportunity of the CEO's long-term incentives when introducing performance equity. Further, performance-based long-term incentives have been earned at maximum in each of the last four cycles and above target in nine out of the last ten cycles. The most recent award for FY18-20 was earned at maximum despite negative performance over the period. Notwithstanding this regular outperformance, the company has not adjusted targets and the FY20 award continues to target merely median-level performance.”

From a quick review of the proxy statement it seems that components of awards paid out at maximum again for 2021.

The company provided FAQ style answers to some of these concerns, but the answers strike me as woefully inadequate. Halliburton has been on As You Sow’s list of companies with overpaid CEOs seven times.