Issue: CEO Remuneration and Board Independence
The company appointed a new Chief Executive Officer in the last couple of years and we believe a stricter approach to CEO remuneration and to the independence of Board Directors needs to be put in place.
To convince the Board to put in place stricter performance requirements on CEO remuneration and to reduce the number of Board Directorships some Johnson Controls Directors have.
Scope and process:
At the company’s 2018 Annual General Meeting, we voted against the reappointment of one of the company’s Directors on the basis that he holds too many Board-level Directorships to be able to devote adequate attention to his responsibilities at Johnson Controls. We also voted against the CEO’s remuneration package including specifically the severance package.
Following the vote, we wrote to the Lead Director at the company to set out our reasons for voting as we did. We also expressed our disappointment with the new executive incentive structure which in our view includes undemanding targets and too short a performance term.
The company’s Lead Director responded to our letter to confirm that the CEO had voluntarily terminated the severance agreement and that the Board Director had resigned one of his other directorships. The letter also claimed that the Compensation Committee has put in place ‘a more rigorous short-term incentive plan’ for executive officers.