Paccar is once again pushing back against a proposal that would require it to seek shareholder approval for any new or renewed pay package that provides for “excessive” severance payments for its executives, according to a proxy statement.
Corporate governance activist John Chevedden filed the proposal, which targets termination payments that would exceed 2.99 times the eliminated officer’s base pay and short-term bonus. He filed the same proposal in 2023, but it did not receive enough shareholder support.
The OEM’s board of directors have argued that such a requirement is unnecessary, because the company does not have employment or severance agreements but rather a “separation pay plan” for executives that are cut in the event of a business restructuring or reduction in workforce. As part of that plan, officers are entitled to up to six months of their base salary, which Paccar says is far below the 2.99 threshold.
“PACCAR has excellent corporate governance policies and practices that enhance stockholder returns. Its conservative policies ensure that the Company is governed in accordance with the highest standards of integrity,” the board said in the proxy.
Shareholder proposals regarding golden parachutes have been on the rise in recent years, per Harvard Law School Forum on Corporate Governance research.
Between 2020 and 2023, 61 proposals were filed and 15% had passed as of November 2023. Among them, FedEx shareholders passed a say-on-golden parachutes proposal in 2021, and Spirit AeroSystems Holdings followed in 2022.
However, Spirit CEO Patrick Shanahan got a $28.5 million payout in 2024 following the company’s merger with Boeing, Reuters reported.
Paccar investors will vote on the proposal on April 29, at the company’s annual meeting of stockholders in Renton, Washington.
