One company’s shareholders voted no on say-on-pay. Its CEO is the highest-paid in Minnesota.

While shareholders don’t get to approve executive compensation plans, they do get to say whether they agree with them.

The so-called say-on-pay vote came out of the Dodd-Frank Act of 2010, which in turn was a result of the banking crisis that helped lead to the 2008-’09 recession.

In the 2024 proxy season, shareholders at only 14 companies on the Russell 3000 index voted against the executive compensation plans. Two of those companies were in Minnesota: 3M and Bio-Techne.

Bio-Techne’s Charles Kummeth tops this year’s list of highest-paid Minnesota public company executives, with $59.5 million in compensation in 2023. Kummeth retired Jan. 31 after 11 years as CEO of the company.

Kummeth’s pay increased 19% over the previous year.

Overall, the 50 highest-paid CEOs made $441.0 million, down 12.5% from 2022, with a half-dozen executives seeing a 40% decline from the previous year and 13 instead of 16 with $10 million-plus compensation packages.

No. 2 on the list is Ameriprise’s James Cracchiolo, who for the fourth year in a row made more than $50 million, although his compensation decreased 3.2% from the prior year.

A majority of compensation packages for most executives are stock options and awards, and those contributed to both the declines and the bumps like Kummeth’s.

Life Time Group Holdings Chairman and Chief Executive Bahram Akradi saw his pay decrease 91.5% to $1.6 million because he had no equity awards that vested in 2023. Dean Hager, former CEO of Jamf, and Digi International Chief Executive Ron Konezny likewise had a lot fewer awards in 2023 and saw pay decline 77% and 63%, respectively.

It’s still rare for shareholders to vote no on say-on-pay proposals, and when they do, it likely highlights frustration with excessive compensation or lackluster corporate performance. While those votes are not binding, they can result in changes in the formulas for executive pay going forward — or at least more shareholder engagement and communication.

Time will tell for 3M and Bio-Techne whether the board will consider the no votes. Like Bio-Techne, 3M will have a new leader on the Star Tribune’s list next year. Mike Roman retired as chief executive in May; he remains chairman of 3M’s board.

Bio-Techne’s shareholders have had concerns over Kummeth’s pay for several years. The say-on-pay proposal passed with 61.5% support in 2022 and 55.3% support in 2021. Even after the company made some changes to the compensation plan, only 35% supported it at the annual meeting in October.

In contrast, 91.2% of Russell 3000 companies saw a positive result on the say-on-pay votes, according to executive compensation firm Semler Brossy.

The Star Tribune calculates total compensation a bit differently than what is listed in a company’s proxy statement. The proxy counts the value of long-term equity awards when they are granted; the Star Tribune’s methodology counts them when they vest or are exercised.

Under the proxy statement, for example, Kummeth’s pay was listed at $30.6 million, 100% higher than the previous year. The increase mostly came from two performance-vested option grants worth $25.3 million.

Under his time as CEO, the company’s stock had a total return of 346%, while the S&P 500 index saw an increase of 285%. However, shares lagged the broader index the two previous fiscal years.

Kummeth’s successor, Kim Kelderman, who had been president of Bio-Techne’s diagnostics and genomics business since 2018 and then chief operating officer, assumed his new role Feb. 1. Under Kelderman’s new employment contract, his annual base salary increased from $750,000 as COO to $900,000 as CEO and he received long-term equity awards worth $6.2 million.

At 3M, 45% of shareholders approved the executive compensation plan, down from 87% the previous year. A Semler Brossy report said the likely cause of the failed vote at 3M was from the relationship of pay and performance, rigor of performance goals, and the amount of shareholder outreach and disclosure.

Roman’s $7.1 million package was down 6% from the prior year and down 25% from his peak earnings year of 2022 when he realized $9.6 million. Roman could still benefit from stock awards and options that have not vested or he has not yet exercised.

In total, Roman has 1.3 million stock options that were granted in prior years that he could conceivably exercise through 2033. But with 3M’s stock price around $103 a share all of those options are currently underwater and the share price would have to rise to $234 a share in order for Roman to exercise all of those options.

Roman’s tenure was plagued by lawsuits over PFAS chemicals and military earplugs, which led in part to the company cutting its annual dividend and ending its streak of 64 years of annual dividend rate increases. The company also spun off its health care business, Solventum, as a standalone public company.

Bill Brown, Roman’s successor at 3M, received an initial compensation package totaling $19.1 million, including $11.2 million in equity awards that are a combination of restricted stock grants, performance share awards and stock options.

Bryan Hanson, the CEO of Solventum, the 3M spinoff, made $10.3 million. That total included $9.2 million that was part signing bonus and partly to make good on equity Hanson was surrendering at his previous employer.

Equilar Inc., a source for executive intelligence including compensation and governance data, said in its report on the 2024 proxy season that CEO pay at S&P 500 companies increased 12.6% in 2024 to $16.3 million, in part due to strong economic growth in the U.S.