Annual Meeting: May 9
Compensation for Nucor Chairman and CEO John Ferriola increased again this year, to a total of $15.5 million. There are several compensation practices at Nucor which may merit a vote of opposition.
The annual incentive is driven largely by the return on equity (ROE), which is weighed at 75%. ROE target for 2018 was set at 8%, which is significantly below 2017 ROE achievement, of 15.78%. The actual ROE for 2018 was 25.17 which exceeded the maximum threshold.
In general shareholders prefer that challenging goals be set each year. The message sent should not be more along the lines of, “Good job – now let’s see if you can do a little better” rather than “Let’s make it easier this year.”
Groundwork was also laid for future large packages. The CEO’s maximum opportunity for annual incentives was increased from 300% to 400% of base salary.
Shareholders are likely to also have concerns regarding the severance packages awarded to departing Executive Vice President James Darsey. Despite the fact that the departure was reportedly voluntary and done in accordance with the succession plan the company had, Darsey’s total compensation of $6.4 million included a severance of $1.6 million and a non-compete payment of $641,176. The company has the policy of awarding these so-called “severance” packages, which are really just retirement-sweeteners, for all executives and this is out of step with best practices.