Chiquita Brands is asking investors to approve pay packages for its top executives, despite a leading shareholder advisory group’s recommendation to vote no, according to Securities and Exchange Commission documents filed Tuesday.
Shareholders will vote at the company’s annual meeting next week in Cincinnati, Ohio. The company is in the midst of a relocation to Charlotte’s NASCAR Plaza office tower, which will be completed this summer.
Institutional Shareholder Services, a major shareholder advisory group, is recommending shareholders vote against executive pay packages adopted by the board of directors. The “say-on-pay” vote is advisory, not binding, but companies that fail such votes suffer a public embarrassment and must explain next year how they took that vote into account.
Chiquita CEO Fernando Aguirre was paid almost $6 million last year, the bulk of that in a $4.8 million stock award and $1 million salary. He received no cash bonus. His total pay package was up from 2010, when he was paid $5.6 million.
The company’s other four top named executives made just under $6.1 million, combined.
In its filing Tuesday, Chiquita said ISS gave its recommendation against the pay packages because of “what they perceive as a pay for performance disconnect,” and said the methodology is “superficial and flawed.”
“Our executive compensation program continues to successfully link realized compensation to our corporate performance, which is the intention of the program's design,” said Chiquita.
Chiquita’s stock has fallen sharply in the last 12 months. On Tuesday, shares were trading at $5.36 a share, down more than two thirds from their price of $14.64 a share one year ago. The company also posted an $11 million loss in its most recent quarter, as the price of bananas slumped.
The company said the ISS recommendation was based on a criterion that’s too narrow. “ISS evaluates company performance solely based on total shareholder return, which, in our judgment, should not be the exclusive measurement of pay for performance,” said Chiquita. “In particular, we do not believe performance should be judged on one metric on one day.”
Chiquita also said the company is aware it needs to improve performance, and voting down pay packages isn’t needed to drive the point home.
“We recognize that current economic times are challenging and that the Company's current economic performance is not what we want it to be. Let us assure you that we our mindful of that,” the company said. “A negative vote on this proposal is not needed to deliver that message.”
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