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TJX faces criticism over big gap between CEO and median worker pay

Local investment firm pushes for changes in approach to setting executive compensation

A Boston investment firm with a history of corporate activism has set its sights on TJX in its campaign to narrow the huge disparity between what corporate bosses and rank-and-file workers are paid.

Trillium Asset Management is pushing a nonbinding shareholder proposal at TJX’s annual meeting scheduled for Tuesday that would prompt TJX board members to consider the pay levels for all classifications of employees when setting the chief executive’s compensation. Trillium, in its proposal, points out the wide gap between Ernie Herrman’s compensation and the median pay level among its roughly 270,000 employees in TJX’s 2019 fiscal year.


That ratio, 1,596 to 1, put the Framingham-based retail giant near the top of companies in the Standard & Poor’s 500 for this measure, according to a ranking by the AFL-CIO. Herrman’s total compensation that year, including stock and long-term incentive awards, reached nearly $19 million. His 2020 package, which became public after Trillium filed its proposal, was similar in value, also around $19 million. The median pay of TJX employees? $12,000.

Jonas Kron, a senior vice president at Trillium, said his firm’s proposal was crafted long before the COVID-19 pandemic, which forced TJX to temporarily close all its US stores, furlough shop employees, and cut pay of executives. But the pandemic has highlighted pay inequities in many industries, Kron said, underscoring the need for companies to take the rank and file into consideration when setting compensation at the top.

“As Americans are returning to work at TJX stores as they’re reopening, they’re going to be taking on additional risks,” Kron said. “This is an opportunity for TJX to show the workers that they understand the financial and economic challenges they are facing.”

The board of directors at TJX, the parent of the Marshalls and T.J. Maxx chains, has gone on record opposing the measure. In a statement in the company’s proxy, TJX says it already improved its executive pay practices two years ago in response to shareholder feedback. The board said it takes a “thoughtful and deliberate approach” to setting pay levels for its top brass, and does not believe Trillium’s policy suggestion would add “meaningful value” to what it calls a “robust decision-making process.” (A company spokesman declined to comment beyond what is in the proxy.)


TJX also points out an important caveat about its pay ratio: Companies have some flexibility in the kinds of workers they can count in the median calculation. In TJX’s case, the company includes part-time, seasonal, and overseas workers.

Of Trillium’s $3.2 billion in assets under management, it holds about $28 million in TJX shares on behalf of its clients, Kron said, less than 1 percent of the company’s outstanding shares. Trillium has pushed for worker-pay proposals at TJX before, but this is the first one from Trillium that the Securities and Exchange Commission has allowed on the ballot for shareholders to consider.

It’s similar to one that the AFL-CIO placed before snack-maker Mondelez. That proposal received the support of only about 10 percent of the voting shares in May, according to Brandon Rees, a deputy director of corporations and capital markets for the AFL-CIO. “It’s not a crazy thing to ask, that you consider the pay of the entire workforce when setting CEO pay,” Rees said.


Like Rees, Kron is concerned big public companies tend to base their CEO compensation on executive pay levels at similar peer companies, a common practice that Rees and Kron say can create an upward spiral in pay packages.

Trillium specializes in what’s known as Environmental, Social, and Governance investing, a part of the investment industry focused on socially conscious businesses. Kron said TJX qualifies as one such company because its basic business model provides a benefit to society: reselling clothes and other goods at a cheap price that might otherwise be thrown away.

“There is a strong ESG story from an environmental point of view there,” Kron said. “But no company is perfect.”

Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.