About 48.5% of voting shareholders voted against the company’s executive pay plan in what’s known as the Say-on-Pay vote, according to vote results of the May 18 meeting filed with the SEC on Friday. The plan had 92% support in 2021, according to that year’s SEC filing, and about 90% support the year before that.
“We believe in, and will continue to focus on, aligning executive compensation with long-term shareholder value creation,” the company told Medical Design & Outsourcing today. “Our board will carefully consider the input we received from our shareholders in connection with this year’s annual meeting. We will continue to engage with shareholders as we develop our executive compensation plans.”
Because these are advisory votes, they don’t require the board or management to take action and won’t affect executive pay unless the board takes steps on its own. But it’s a way for investors to put the board and top executives on notice.
Following the 2021 vote’s overwhelming support, the Henry Schein board’s Compensation Committee said it mostly returned to its pre-pandemic approach on executive compensation.
“The Compensation Committee expects to continue to consider the outcome of the Company’s say-on-pay votes, stockholder discussions and input and continuing developments related to the COVID-19 pandemic when making future compensation decisions,” the committee told investors ahead of the latest vote.
Melville, New York-based Henry Schein is the world’s largest provider of health care supplies and services for office-based dental and medical practitioners. Another leading medtech firm, Zimmer Biomet (NYSE:ZBH), on Friday also disclosed a lackluster shareholder response to its executive pay packages.
Institutional Shareholder Services (ISS), which advises large institutional investors on how to vote on executive compensation and other governance issues, examines a company’s responsiveness to shareholders if a Say-on-Pay vote receives less than 70 percent support.
“If the company has demonstrated poor responsiveness, ISS will generally recommend a vote against the say-on-pay proposal and incumbent compensation committee members,” ISS told clients ahead of this year’s annual meetings. “ISS may limit the adverse recommendation to the say-on-pay proposal if the board has demonstrated a limited degree of responsiveness, but which falls short of a robust response. In cases of multiple years of insufficient responsiveness indicating a systemic problem around board stewardship and oversight, ISS may recommend against the full board.”
How much does the CEO of Henry Schein and his top executives make?
Henry Schein reported nearly $10.8 million in total compensation for CEO and Chair Stanley Bergman in 2021, up nearly 73% from $6.2 million the year before.
His latest pay package was still smaller than the $14.4 million in total compensation he received in 2019. That included a $6.45 million stock award connected to the renewal of his employment contract through 2022, plus one-year extensions if the company and Bergman both agree.
His 2021 pay included his $1.5 million salary, $4.3 million in stock awards, $1.5 million in option awards, $3.2 million in bonuses and more than $238,000 in other compensation, including 401(k) matches, Supplemental Executive Retirement Plan (SERP) contributions, personal commuting expenses and administrative and phone services.
Henry Schein said Bergman most recent pay package was 121 times more than pay for its median employee, which the company calculated at $72,625.
Henry Schein’s second-highest-paid executive is Vice Chair and President James Breslawski, who received $4.3 million in total compensation. Following him is EVP and CFO Steven Paladino at $3.9 million, EVP and Chief Administrative Officer Gerald Benjamin at $3.7 million and EVP and Chief Strategic Officer Mark Mlotek at $3.5 million.
Benjamin is retiring on July 1 but will advise the company in retirement. When Benjamin retires, the company will promote Secretary and SVP of Corporate & Legal Affairs Michael Ettinger to the position of EVP and chief operating officer.