Abbott disputes ‘flawed and inaccurate’ proxy report over CEO’s pay

Abbott (NYSE:ABT) this week disputed a proxy statement made by Institutional Shareholder Services, saying it posed “incorrect, unreliable voting recommendations” related to executive compensation and a separation of the board chair and CEO positions, which are slated to be voted on at the company’s upcoming annual shareholder meeting.

The company said that ISS was aware that their report was inaccurate, and that the group ignored attempts to correct said inaccuracies.

Abbott said it has made multiple requests with ISS seeking a meeting to discuss the report it sent, and that ISS refused to engage with them and produced what it called a “flawed and inaccurate report,” according to an SEC filing.

The company suggested that the recommendations were affected by inappropriate manipulation of the company’s peer group and its GAAP and non-GAAP measures, as well as inflation of CEO compensation and a false claim that the company’s proxy statement “lacked adequate disclosure,” according to the SEC filing.

Abbott said that ISS reached its conclusion urging specific voting behavior based entirely on concerns about controlling executive compensation through a “distorted analysis,” according to the filing.

“ISS’s pay recommendations should not be determined by manipulating a peer group and selectively using GAAP and non-GAAP measures to artificially lessen performance while inflating CEO pay. Our CEO was awarded LTI at the 23rd percentile of our peer group in 2017, while our Company performed at the top of our peer group with a TSR of 52%. Yet ISS has chosen to manipulate performance and pay measures, and incorrectly contend that our proxy statement lacks robust and adequate disclosure to recommend a vote against say-on-pay. ISS then uses its flawed conclusion on executive pay as the basis for its conclusion on the separation of chairman and CEO. We have previously set forth in our proxy statement a comprehensive discussion of our pay for performance philosophy and our robust executive compensation program and governance process. The compensation committee takes great care to ensure that compensation decisions are based on tangible performance in accordance with our pay for performance philosophy, as evidence by the varied pay decisions related to pay that are reflected in our proxy,” the company wrote in its filing.

Shares in Abbott have fallen approximately 2% today, at $58.67 as of 12:09 p.m. EDT.

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