Ernie Herrman, president & CEO of The TJX Cos., Inc.
June 9, 2020
Shareholders ask TJX to fix $19M vs. $12K CEO-to-worker pay disparity
Photo/Grant Welker
TJX's Framingham headquarters
Shareholders at Framingham retail parent firm TJX Cos., Inc. are requesting executive pay scales be changed to help close a company-wide earnings gap where the top executive makes nearly 1,600 times more than the average workers, according to a proposal published by Trillium Asset Management of Boston.
In asking that the board of directors' executive compensation committee consider all TJX employee salaries when setting target salaries for the CEO, shareholders argued high pay disparities between CEOs and other executives can undermine collaboration and teamwork, and high CEO compensation can negatively impact morale and productivity among employees who aren't senior executives.
In the request, shareholders noted that TJX CEO Ernie Herrman was paid $18.9 million in 2019 while the company's median employee payout was $11,791, representing a pay ratio of 1,596:1.
The shareholder request noted TJX, like other companies, sets its CEO compensation targets by using peer group benchmarks. The target pay figures may then be adjusted based on performance, according to the request. But peer group benchmarks can lead to pay inflation, shareholders argued, particularly when peer groups include CEOs of larger companies where compensation is higher. This, shareholders argued, is why TJX should also include other TJX employee salary ranges when determining what Herrman should be paid.
The annual shareholder meeting for TJX is set to take place on Tuesday.
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