Meeting June 12

On the one hand, FleetCor could be seen as a victory of the power of the advisory vote on compensation: a clear example of pay declining in response to shareholder opposition. Last year, when the company awarded the CEO an excessive equity grant, 85.7% of shares cast voted AGAINST pay. The vote did inspire change: pay for CEO Ronald F. Clarke declined sharply – from $52.6 million in 2017 to $7.7 million in 2018.

FleetCor’s problems extend beyond compensation issues. The fuel card operator has been criticized/exposed for its excessive fees in the past. Now a research group contends that the company is engaged in “clean energy fraud.”


The vote against CEO pay at FleetCor last year was as close to unanimous as these things get: Vanguard, BlackRock, and Fidelity – all funds that we believe support too many pay packages – opposed pay. This was the second year in a row that the advisory vote failed at the company, but the first time the company seemed to have responded. Perhaps it was the fact that they received less shareholder support on compensation than any other company in the S&P 500.

The company brought in consultant Pearl Meyer to do a review. The CEO agreed to an outright limit on compensation for one year. Specifically, according to the proxy statement: “The compensation committee and Mr. Clarke agreed that Mr. Clarke’s total compensation for 2018 would not exceed $8 million. We included a restriction in the Amended and Restated 2010 Equity Compensation Plan against making any grants from the 3,500,000 share pool increase to Mr. Clarke in 2018 and 2019.”

However, this seems to be a short term change to what have been long-term problems. Another change, adopting a “minimum vesting period of one year” also seems extraordinarily short-term focused.

In addition to voting on the advisory vote, shareholders will also have the opportunity to vote on two compensation-related shareholder proposals. The first calls on the board to adopt a clawback policy to provide that the compensation committee will review, and determine whether to seek recoupment of, incentive compensation paid, granted or awarded to a senior executive. I expect many shareholders will support this proposal, though in the context of the company’s behavior it may largely be too little too late. In 2011, Clarke owned over three million shares of company stock. He currently owns less than a million shares. Over the years he has sold stock for a figure that I am not able to estimate, but is probably over one hundred million dollars. The wealth Clarke has acquired is beyond the reaches of any clawback policy.

The second proposal is related to the issue of stock buybacks, with shareholders calling on the board to “adopt a policy that financial performance metrics shall be adjusted, to the extent practicable, to exclude the impact of share repurchases when determining the amount or vesting of any senior executive incentive compensation grant or award.” The proponent, the Comptroller of the State of New York State, suggest that executives are fundamentally responsible for improving operational performance, and that it is the role of the Board to determine the timing of stock buybacks.

Finally, if the more recent allegations of the company prove to be correct, executives and board members are guilty of actions much worse than overpay, though fraud is often inspired by greed. Earlier this month Citron issued a report on the company entitled: Citron Exposes the Largest Clean Energy Fraud in US History. The research firm’s allegations, as summarized in this MarketWatch article: “less than 1% of the fees paid by customers to reduce their carbon footprint is used for offsetting investments and notes that the scheme has garnered at least $100 million since it was launched in 2015.”

Rosanna Weaver