Key facts
- ISS advised Conagra shareholders to vote against the proposed executive compensation program.
- Concerns cited include declining financial performance and unclear target setting.
- CEO John Brase's compensation package includes a $1.15 million base salary and substantial long-term incentives.
- ISS noted that short-term target goals were set below previous achievement levels without a disclosed rationale.
- The number of shares for the CEO's long-term incentive award increased significantly, potentially shielding executives from stock price declines.
Proxy adviser Institutional Shareholder Services (ISS) has recommended that Conagra Brands shareholders vote against the company's proposed executive compensation program. The advisory firm cited concerns regarding declining financial performance and a lack of clarity surrounding performance targets.
ISS noted that CEO John Brase's pay increased while the company's financial performance declined over the past year. Brase's compensation package includes a $1.15 million base salary, an annual incentive target opportunity of 150% of his base salary, and $7.3 million in long-term incentives comprising 60% performance shares and 40% restricted stock units. The firm also pointed out that short-term target goals were set below previous achievement levels for the second consecutive year, with no clear rationale disclosed.
Furthermore, ISS observed that the number of shares underlying the CEO's long-term incentive award increased substantially due to the company's negative stock price trajectory, a practice that could insulate executives from poor stock performance. However, ISS did acknowledge positive aspects, such as incentives being based mainly on objective goals. Conagra's human resources committee chair, John Mulligan, highlighted that approximately 90% of Brase's total direct compensation is tied to company performance and long-term shareholder value creation.
Conagra, known for brands like Hunt's ketchup and Slim Jim, halved its annual dividend in July and is under new CEO John Brase reviewing its non-core assets after issuing a weak profit outlook. The company's annual general meeting is scheduled for September 23, where shareholders will vote on the proposed pay program.