A Third of Caterpillar
Investors Reject Executive Pay Plan
June 10, 2015 — 11:15 AM EDT
June 10, 2015
— 4:27 PM EDT
Caterpillar Inc. shareholders approved
an advisory vote on executive compensation, with a third voting
against the plan signaling some dissatisfaction with management’s
Preliminary voting results indicate 66
percent of stockholders of the world’s largest maker of mining and
construction equipment approved the proposal, Rachel Potts, a
spokeswoman for the Peoria, Illinois-based company, said in an e-mail
Wednesday. Last year, Caterpillar’s executive compensation proposal
received 96 percent approval, Potts said.
“We will continue to maintain a dialogue
with our stockholders with regard to issues that are of interest
and/or concern to them,” Edward Rust, presiding director of the
Caterpillar board, said in an e-mailed statement.
Caterpillar’s sales have dropped about
$10 billion in the last two years as demand for its signature yellow
equipment declined after mining activity slowed and oil prices
tumbled. Sales are expected to fall again this year and profit per
share will drop 22 percent, according to the average of 13 analysts’
estimates surveyed by Bloomberg.
Meanwhile, Caterpillar Chairman and
Chief Executive Officer Doug Oberhelman’s reported pay has climbed 14
percent to $17.1 million in 2014, according to data compiled by
Bloomberg. Over the past 12 months, the stock has tumbled 19 percent.
Shares rose 2 percent to $88.48 at the close in New York.
The company is facing “shareholder
discontent” over a widening gap between its waning stock price and
Oberhelman’s compensation, according to CtW Investment Group, which
was pushing for investors to reject the pay proposal. The group had
criticized the company’s shift to connecting compensation to earnings
per share, which it argues can be affected by share buybacks.
In January 2014, Caterpillar’s board
approved a share repurchase plan for as much as $10 billion. Through
the end of the first quarter of this year, $2.9 billion has been
spent, according to a securities
“Caterpillar has a rebuilding project of
its own: executive pay needs overhauling and its credibility with
long-term investors re-constructed,” Dieter Waizenegger, executive
director of CtW Investment Group, said in an e-mailed statement
The board today also approved increasing
the quarterly cash dividend 10 percent to 77 cents a share.