RESOLVED: Shareholders of The TJX Companies, Inc. request that the Executive Compensation Committee of the Board of Directors take into consideration the pay grades and/or salary ranges of all classifications of Company employees when setting target amounts for CEO compensation.
RESOLVED: Shareholders of The TJX Companies, Inc. (the “Company”) request that the Executive Compensation Committee (the “Committee”) of the Board of Directors take into consideration the pay grades and/or salary ranges of all classifications of Company employees when setting target amounts for Chief Executive Officer (“CEO”) compensation. Compliance with this policy is excused if it will result in the violation of any existing contractual obligation or the terms of any existing compensation plan.
This proposal encourages the Committee to consider whether the CEO’s compensation is internally aligned with the Company’s pay practices for its other employees. Under this proposal, the Committee will have discretion to determine how other employees’ pay should influence CEO compensation. This proposal does not require the Committee to use employee pay data in a specific way to set CEO compensation.
This proposal is not a request for new disclosures. Rather, it is a suggested improvement and enhancement to the Committee’s process for setting target amounts for the CEO’s compensation. Under this proposal, how the Committee would consider employee compensation is within its discretion. The Committee also retains authority to use peer group data or any other relevant information when setting CEO pay targets.
Like at many companies, the Committee has used peer group benchmarks of what other companies pay their CEOs to set its target CEO pay. To ensure that the Company’s CEO compensation is reasonable relative to the Company’s overall employee pay philosophy and structure, we believe that the Committee should also consider the pay grades and/or salary ranges of all Company employees when setting CEO compensation target amounts.
Over time, using peer group benchmarks as the primary measure to set CEO compensation targets can lead to pay inflation. Although many companies target CEO compensation at the median of their peer group, certain companies have targeted their CEO’s pay above median. In addition, peer groups can be cherry-picked to include larger or more successful companies where CEO compensation is higher. (Elson and Ferrere, “Executive Superstars, Peer Groups and Overcompensation,” Journal of Corporation Law, Spring 2013).
According to one study, labor productivity as measured by sales per employee was lower for companies with higher pay ratios. (Block, “Income Inequality and the Intracorporate Pay Gap,” MSCI, April 2016). Another study found high pay ratios can negatively affect consumer purchases. (Mohan et al., “Consumers Avoid Buying From Firms With Higher CEO‐to‐Worker Pay Ratios,” Journal of Consumer Psychology, April 2018).
High pay disparities between CEOs and other senior executives can undermine collaboration and teamwork. High levels of CEO pay can also negatively affect the morale and productivity of non-senior executive employees.
The Company reports that it paid its median employee $12,006 in fiscal 2020. In its 2019 CSR Report, it reports 78% of its global workforce is female and 57% of its U.S. workforce is people of color.