Stockholder Proposal on CEO Pay Ratio
Resolved: stockholders recommend that Gilead Sciences, Inc. (the Company) reduce the CEO Pay Ratio by 5-10% each year until it reaches 20 to 1.
Section 953(b) of the Dodd-Frank Act directed the SEC to amend Item 402 of Regulation S-K to require each company to disclose the annual total compensation of the CEO, the median of the annual total compensation of all employees (except the CEO), and the ratio of these two amounts (CEO pay ratio). In 2018, the Company’s CEO pay ratio was 158 to 1 (2019 Notice of Annual Meeting of Stockholders and Proxy Statement p. 75), from 94 to 1 in 2017 (Notice of Annual Meeting of Stockholders and Proxy Statement 2018 p. 73). Compared with big European and Japanese companies where the CEO pay ratios are less than 20 to 1, America’s CEOs are overpaid too much.
Nationwide, “Median compensation for 132 chief executives of S&P 500 companies reached $12.4 million in 2018, up from $11.7 million for the same group in 2017, according to a Wall Street Journal analysis.” (March 17, 2019). “CEOs rake in 940% more than 40 years ago, while average workers earn 12% more” (CBSNEWS August 14, 2019). America’s ballooning executive compensation is not sustainable for the economy.
It is time for American executives as citizens to take the social responsibility on their own initiative rather than to be forced to do so by the public, such as United States Senator Elizabeth Warren’s plan “transforming large American companies by letting their workers elect at least 40% of the company’s board members to give them a powerful voice in decisions about wages.”
The Company’s board of directors has the flexibility to implement this proposal, such as including representatives from employees to the Compensation Committee rather than relying on a compensation consulting firm, which is paid by the Company.