Back in July, CtW Investment Group intervened on an upcoming raise for Electronic Arts executives with CFO Blake Jorgensen and CTO Kenneth Moss mentioned specifically in an open letter. CtW Investment Group stated that while executives often receive multi-million dollar bonuses, Electronic Arts routinely purges lower-level staff after the release of a game or project. They also took note that despite making more money in the past, Electronic Arts often fails to hit projected milestones.
The proposal for raises went to shareholders on August 6th, and the shareholders came back rejecting the package with a 74% majority vote. The type of raise package is “Say-On-Pay”, and according to report from Semler Brossy, these kinds of raises only get rejected 2.7% of the time that they are proposed. “Shareholders have taken a more critical approach when voting on compensation plans, but average support was still over 90 percent last year,” the report stated.
Apart from the rejection has been fueled by recent spikes in executive compensation. Jorgensen’s total proposed pay for the 2020 fiscal year is $19.5 million, up from $9.4 million last year. Kenneth Moss is receiving $14.3 million in total compensation, up from $7 million in the year before. The pay is a mixture of direct cash, stocks, and other assets that are not immediately able to be liquidated.
Shareholders issued a resounding rebuke of Electronic Arts’ deeply flawed executive pay practices that does not incentivize executives to create long-term value.
CtW Investment Group applauded the vote claiming it was a sign that the company needs to shift its pay philosophy from overcompensating the executives to a system that values talent development and retention. While the opposition to the package is a change from the shareholders, the package needs to be finalized by the board of directors who are the final say and can push the package forward or reject it completely.