• Salesforce investors declined to approve compensation for the company's executives, defying a board recommendation.
• Shareholder advisory firms expressed concerns about a second equity award that CEO Marc Benioff received in January.
• The vote is nonbinding.

Salesforce investors voted against the company's compensation plan for top executives, after shareholder advisory groups raised concerns about equity awards granted to CEO Marc Benioff.

According to a regulatory filing on Monday, the resolution to approve the compensation received 339.3 million votes in favor and 404.8 million against at the annual meeting held on Thursday.

The board had urged shareholders to vote in favor of the resolution. But two shareholder advisory firms, Glass Lewis and Institutional Shareholder Services, both recommended that investors vote down the measure.

For the 2024 fiscal year, Benioff received $39.6 million in total pay, up from $29.9 million in the prior year. While Benioff's salary was flat at $1.55 million, he received additional stock and option awards and nonequity incentive plan compensation, according to the proxy statement. The most recent sum also included security fees that had not previously been invoiced to the company.

In January, the board's compensation committee gave Benioff a second long-term equity award worth $20 million, in recognition of the company's "successful transformation actions and strong financial performance in the fiscal year," among other factors.

Glass Lewis wrote in its recommendation that "shareholders may reasonably be wary of the substantial discretionary equity grants" issued to Benioff in January, adding that there was a "lack of a fully convincing rationale" behind the grants.

Benioff was already among the largest holders of Salesforce, with a stake of over 2% valued at close to $6 billion. Glass Lewis said in its proxy paper that the additional performance-based restricted stock units and stock options were "unwarranted" because his interests were already aligned with that of shareholders.

The vote from the annual meeting is nonbinding.

"Our Compensation Committee, which is responsible for designing and administering our executive compensation program, values the opinions expressed by our stockholders and will consider the outcome of this vote when making future executive compensation decisions," Salesforce's board said in the company's proxy statement.

The company declined to comment.

Salesforce shares rose 67% in the 2024 fiscal year ended Jan. 31, the strongest performance since 2011.

Net income jumped to $4.1 billion in the fiscal year from $208 million a year earlier, while revenue increased 11% to $34.9 billion from $31.4 billion. In January 2023, Salesforce announced plans to lay off 10% of employees, after activist investors began buying up stakes and demanding a better mix of profit and growth. Salesforce said in February it would begin paying a dividend to shareholders.

Salesforce shares are off 2.6% year to date.

WATCH: Buying environment 'measured' for enterprise software companies post-pandemic