June 11, 2019

Comcast CEO Brian Roberts’ compensation for 2018 was over $35 million. Comcast has the distinction of having appeared on As You Sow’s list of overpaid CEOs on each of the five past years. Despite a history of egregious pay problems the company has not needed to substantially address the issues because of the way the voting is structured. Institutional investors own Class A shares. Brian Roberts owns 100% of Class B shares. As noted in the proxy statement, “Class A common stock is entitled to 0.0626 votes per share and each holder of Class B common stock is entitled to 15 votes per share.”

One compensation issue, which I described in detail when I first wrote about Comcast in 2015, is the deferred compensation package with its guaranteed rate of return. The total amount in Roberts’ deferred compensation account at the end of the fiscal year 2014 was $96,641,079. All amounts contributed prior to January 1, 2014 earn a guaranteed interest crediting rate of 12%. Those since that time earn a guaranteed 9%. Though he is 59, Roberts’ has begun drawing down the amount – taking out over $14.6 million this year – and the total is now $84.3 million.

Despite the fact that he has begun to withdraw from the plan, the company make a $4.4 million contribution to Roberts’ deferred compensation account, a 5% increase from last year.

Comcast appeared in a recent analysis by MarketWatch’s Francine McKenna, “Here’s one way to tell if a company is overpaying its CEO” about companies that award bonuses on the basis of non-GAAP figures. MarketWatch, using data provided by Audit Analytics, looked at “public companies’ recent use of metrics that adjust GAAP net income in earnings announcements and when calculating executive bonuses” that “used non-GAAP metrics to convert net losses to income and to meet executive bonus targets.” According to the analysis, Comcast’s GAAP earnings were $22.7 billion the bonuses were paid on the $28 billion. Roberts received 112% of his target annual cash bonus, or $10.7 million. He would not have received that if the company used GAAP figures.

These practices are indications of what a company insulated from its shareholders. I believe that companies so insulated from shareholder votes should not be included in index funds.

Rosanna Weaver