Executive Compensation

Once again, executive compensation was a top engagement and voting priority.

Money is a powerful motivator, and ESG activists know it. That’s why for the past several years, they’ve convinced companies not just to make DEI and climate-related pledges, but to condition management’s bonuses on whether or not such goals are met. Strive rejects the corporate pursuit of social goals. And that means we also reject tying executive pay to meeting them.

We’ve been one of the most vocal opponents of such practices, publicly urging Southwest Airlines to drop the practice in the summer of 2023. Since then, we’ve seen significant progress. This past July, the Financial Times credited us with causing “big employers to walk back diversity and environmental measures” in their executive bonus plans.¹⁶

But our work isn’t done.

In 2024, 73% of companies with over $50 billion in annual revenue still tie executive pay to DEI goals—down 4 percentage points from 2023, but still stubbornly high.¹⁷ And climate goals are similarly ubiquitous. Further, some companies have tried to escape scrutiny by changing their executive pay plans to obfuscate, rather than eliminate, how bonuses are tied to various ESG goals.

We’ve spoken out against these tactics, but the fact that such efforts remain demonstrates how deeply rooted these practices are.¹⁸We highlight a few of our executive compensation votes to show what corporate America is up to and how we responded.

BOEING

Strive voted against Boeing’s executive pay plan, which not only ties executive pay to ESG goals, but puts such goals on equal footing with safety and quality. Following our vote, we wrote a letter to the company’s new CEO, Robert “Kelly” Ortberg, urging him to scrap this pay policy and the value-destroying ESG initiatives that undergird it. We shared our view that it was unacceptable to reward executives for achieving social goals, particularly given Boeing’s high-profile financial troubles. We noted that, per Boeing’s report, executives received a dismal 16 out of 40 on stability and 0 out of 40 on quality, but perfect scores on climate and diversity, thereby misaligning incentives with results.¹⁹ Our approach at Boeing demonstrates how voting and engagement go hand in hand to convince companies to focus on what really matters: maximizing value for shareholders.

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THE WALT DISNEY COMPANY

Strive similarly opposed Disney’s executive compensation plan, which rewarded execs for “increas[ing] diverse representation” of women and minorities.²⁰ Among other things, Disney execs were rewarded for pushing DEI in its content, including in the controversial The Little Mermaid remake.²¹ Such metrics allowed executives to obtain bonuses regardless of company performance. In fact, Disney’s Compensation Committee applied an astounding factor of 145% when it came to CEO Bob Iger’s “other” performance factors, leading to his $2 million bonus, even though by the fall of 2023, nearly a year after Iger’s return, Disney stock had reached a near-decade low.²² Because Disney’s pay plan included incentives for DEI pursuits, Strive could not support it.

KRAFT HEINZ

Strive also opposed Kraft Heinz’s executive compensation program, which paid executives for hitting “strategic, ESG, and employee engagement objectives.”²³ The plan rewarded executives for making progress towards the company’s DEI goals,²⁴ including race- and gender-based targets.²⁵ Because Kraft Heinz’s compensation practices encourage executives to prioritize ESG over shareholder interests and long-term financial gains, Strive voted against it.

HEICO

Strive supported the executive compensation package at HEICO, an aerospace and electronics components manufacturer.²⁶

Unlike so many companies that have jumped on the ESG bandwagon, HEICO puts shareholders first. In its proxy statement, HEICO expressly states that it “[m]aintain[s] executive compensation aligned with shareholder interests” and refuses to “[p]lace social and political objectives above” those of shareholders.²⁷ Bonuses are awarded based solely on the company's ability to meet predefined financial targets, including growth in net income, EBITDA, and operating cash flow.²⁸ Because this philosophy aligns with Strive’s belief in shareholder primacy, Strive supported HEICO's executive compensation policy.

SOUTHWEST AIRLINES

Strive's Engagement on Executive Compensation

Strive did more than just oppose executive compensation packages that rewarded progress toward value-destroying ESG and DEI goals; we actively engaged with more than a dozen companies that have adopted such pay practices.

In 2022, Southwest canceled over 16,000 flights, leaving countless customers stranded during the busy holiday season, costing the company more than $1 billion.²⁹ Despite underperformance, Southwest's executives were rewarded with outsized bonuses tied in large part to ESG metrics.³⁰ We wrote a letter to Southwest urging the company to make all business decisions through the lens of maximizing long-term financial value for shareholders, without regard for extraneous social or environmental goals. The amount that executives could be rewarded for ESG in the following year’s proxy statement was significantly reduced (from up to 20% in 2022 to 5% in 2023),³¹ demonstrating that Strive’s efforts to weed out non-financial metrics from executive compensation is resulting in positive change for shareholders.