Charter Communications
Annual meeting: April 27
Charter Chair and CEO Thomas Rutledge’s total compensation in 2020 is $38,846,785, more than four times his pay in 2019, largely because of a $30 million option grant received in 2020.
It is important to note that shareholders won’t vote on pay at Charter Communications this year. It is one of the very few companies that holds a triennial vote on pay, in which shareholders do not have the opportunity to vote on compensation every year. This is very unusual, as shareholders are nearly universal in their desire for an annual vote on pay and almost every company employs such a practice. However, companies with enough insider control can manage to hold a triennial vote, which the SEC rules allow if approved by shareholders. Charter Communications is one of these companies: Liberty Broadcasting and Advance/Newhouse own 27.6 and 12.6 percent of outstanding stock, respectively, and both have had larger ownership stakes in the past.
Charter’s pay practices in 2020 exemplify how companies can use triennial voting to time mega-awards for executives in years when shareholders don’t have the option to vote. For example, Rutledge’s total compensation in 2019 was $8,743,601 and was approved by over 95% of shareholders. There have been other such mega-awards in years when there was not a shareholder vote.
The repeated large option grants have paid off well for Rutledge. In 2020, he exercised 384,285 options, realizing an astonishing $224,451,827 in value, and acquired another 100,465 in stock awards realizing $56,501,114 in vesting.
In situations like this, shareholders will often vote against the compensation committee members if they wish to register dissatisfaction with executive compensation. At Charter Communications, these committee members are: W. Lance Conn, Gregory B. Maffei, Steven A. Miron, Mauricio Ramos, and Eric L. Zinterhofer.
Also up for a vote is a shareholder proposal that addresses Charter’s historic corporate governance problems. The New York State Common Retirement System is calling on shareholders to support their proposal to require that the Chairman of the Board be an independent member of the Board. In other words, to separate the positions of Chairman and CEO. New York State notes that “Charter Communications has numerous governance weaknesses, and failed to address stockholder concerns and substantial risks, leading to questions about whether the current governance structure is in the best interest of stockholders.”