By Oregon State Treasurer 
As a responsible investor, Oregon is taking a strong stance against excessive CEO compensation.
Oregon’s pension fund joined last week with holders of 77 percent of the shares of Chipotle Mexican Grill Inc. and voiced opposition to the salary and bonus package for the company’s top executives.
It was a landslide vote and sent a clear signal that shareholders are concerned about bonuses totaling $40 million to the two founders, giving them combined pay of $50 million. Since 2011, unusual stock awards allowed the two to gain $100 million in addition to their salaries.
The vote is the latest by the Oregon Public Employees Retirement Fund to highlight excessive compensation for executives at public corporations, by opposing “Say on Pay” rederendums at annual meetings. In some industries, chief executives are paid hundreds of times as much as the average workers.
“Public companies are owned by their shareholders and need to make decisions that put shareholders first,” said State Treasurer Ted Wheeler, who is a fiduciary for Oregon public investments and a member of the Oregon Investment Council. “When executives are paid huge sums that are out of whack with their company’s bottom line performance or their peers, and in amounts that exacerbate income inequality, that’s a problem for investors and for the economy overall.”
Executive compensation is a focus for Oregon through its proxy voting program. As an international investor with almost $70 billion in assets, the Oregon Public Employee Retirement Fund is diversified and owns shares of public companies across the globe. Shareholders have the ability to vote at annual meetings.
Federal legislation gives shareholders the opportunity to make their voices heard when it comes to compensation at public corporations, through advisory referendums known as “Say on Pay” votes.
While those votes are advisory, they have proved to make a difference because they yield direct engagement between shareholders and corporate directors. After the Chipotle vote, a company spokesman said the executives would connect with shareholders to ensure compensation programs build value for investors.
Oregon’s proxy voting at annual meetings is managed by San Francisco-based Glass, Lewis & Co., which was hired by the Oregon Investment Council. The Council is responsible for setting the state’s investment policies, which are then administered through the State Treasury.
Through its voting agent in 2013, Oregon participated in 6,006 annual meetings. When “Say on Pay” referendums were on the ballot, Oregon voted “no” 205 times. That represented roughly 15 percent of Say on Pay Proposals, according to Glass, Lewis & Co.
Proxy votes are one method that Oregon employs to push for corporate responsibility and accountability. Treasury also communicates directly with executives and authorizes lawsuits if business practices diminish the value of Oregon holdings.
The Oregon State Treasury protects public assets and saves Oregonians money through its investment, banking, and debt management functions. State investment policies are overseen by the Oregon Investment Council. The State Treasury also promotes public outreach and education to help Oregonians learn strategies to save money, invest for college and make smart financial choices.