BAXTER INTERNATIONAL INC. | Shareholder ratification of excessive termination pay at BAXTER INTERNATIONAL INC.

Status
Deleted
AGM date
Previous AGM date
Proposal number
5
Resolution details
Company ticker
BAX
Lead filer
Individual
Resolution ask
Other ask
ESG theme
  • Governance
ESG sub-theme
  • Remuneration or pay
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Health Care
Company HQ country
United States
Resolved clause
Shareholders request that the Board seek shareholder approval of any senior manager’s new or renewed pay package that provides for severance or termination payments with an estimated value exceeding 2.99 times the sum of the executive’s base salary plus target short-term bonus.
Supporting statement
Baxter has been advised that Kenneth Steiner will present the following resolution at the Annual Meeting. Baxter has also been advised that Mr. Steiner is owner of at least 50 shares of Baxter common stock. “Severance or termination payments” include cash, equity or other pay that is paid out or vests due to a senior executive’s termination for any reason. Payments include those provided under employment agreements, severance plans, and change-in-control clauses in long-term equity plans, but not life insurance, pension benefits, or deferred pay earned and vested prior to termination.

“Estimated total value” includes: lump-sum payments; payments offsetting tax liabilities, perquisites or benefits not vested under a plan generally available to management employees, post-employment consulting fees or office expense and equity awards if vesting is accelerated, or a performance condition waived, due to termination.

The Board shall retain the option to seek shareholder approval after material terms are agreed upon.

Generous performance-based pay can sometimes be justified but shareholder ratification of “golden parachute” severance packages with a total cost exceeding 2.99 times base salary plus target short-term bonus better aligns management pay with shareholder interests.

For instance at one company, that does not have this policy, if the CEO is terminated he could receive $44 million in termination pay—over 10 times his base salary plus short-term bonus. In the event of a change in control, the same person could receive a whopping $124 million in accelerated equity payouts even if he remained employed.

It is of enhanced importance to have greater shareholder oversight of excessive termination pay since we have a weak Lead Director oversight of the one person who has the 2 most important jobs at Baxter, Chairman/CEO Jose Almeida. Our Lead Director, Mr. Albert Stroucken, violates the most important attribute of a Lead Director—independence. As director tenure goes up director independence goes down. Mr. Stroucken has 19-years excessive director tenure. Mr. Osborn’s excessive director tenure makes him a prime candidate to retire especially since he is age 75.

Shareholder Ratification of Excessive Termination Pay received between 51% and 65% support at:
- AbbVie (ABBV)
-FedEx (FDX)
- Spirit AeroSystems (SPR)Alaska Air (ALK)
- Fiserv (FISV)

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