FleetCor Called CEO's Personal ATM After Paying Him $300 MillionBy and
Ronald Clarke paid more than Visa, Mastercard chiefs combined
Unions take issue with CEO’s pay as short seller targets fees
FleetCor Technologies Inc. Chief Executive Officer Ronald Clarke, who once referred to his company as a well-kept secret, finds himself in an unfamiliar spotlight as both his pay and the firm’s sales practices have come under attack.
A provider of payment cards to companies that operate fleets of vehicles, Norcross, Georgia-based FleetCor has paid Clarke more than $300 million over the past seven years. That’s more than the combined compensation in the period for the CEOs of Visa Inc. and Mastercard Inc., the two biggest payment networks. In a public letter Tuesday, CtW Investment Group, an arm of union coalition Change to Win, criticized the pay program.
“FleetCor’s pay plan has more red flags than a Chinese battleship,” said CtW Executive Director Dieter Waizenegger, who wrote the letter on behalf of pension funds that collectively manage $250 billion and own stock in the company. “If you give executives shares, you’d think they would hang on to them. But he’s been cashing out. He’s basically using the company as his personal ATM.”
FleetCor didn’t respond to multiple requests by phone and email for comment, and attempts to reach Clarke directly were unsuccessful.
Clarke has run FleetCor as a public company for a little more than six years, and he’s delivered impressive results. Revenue has quintupled, fueled by acquisitions. And its shares have trounced the market: They’ve surged more than sixfold since the 2010 initial public offering, as the S&P 500 Index almost doubled.
“We’re going to move forward hard, we are going to win new accounts,” Clarke said last month in a conference call with analysts after reporting first-quarter results. “We’re proud here of the way that we compete and the way that we play. So don’t bet against us.”
Since 2010, Clarke has reaped $197 million from shares that have vested and an additional $92 million from stock options he exercised, according to data compiled by Bloomberg. He also received $14.8 million in salary, bonuses and company-paid perks.
By comparison, the two CEOs who ran Mastercard over those years took home a combined $132 million, filings show. At Visa, the top bosses collected $127 million. The two companies together are about 14 times the size of FleetCor based on 2016 revenue.
FleetCor investors holding about 70 percent of the shares rejected the executive compensation program in 2014, the most recent vote held on the matter. Companies in the S&P 500 typically receive less than 10 percent opposition, according to data compiled by Bloomberg.
Since the vote, little has changed, CtW argues. The organization’s letter raises concerns including outsize payments, less-than-rigorous performance metrics and equity awards not closely linked to company results. It also points out that Clarke has sold more than 8 million FleetCor shares since 2011, calling into question the effectiveness of granting him more equity.
“They’re totally ignoring the shareholder vote from three years ago,” Waizenegger said. Investors will weigh in again on the pay at the company’s June 21 annual meeting.
Tucked away in an Atlanta suburb, FleetCor provides payment cards to trucking companies and other commercial fleets. Drivers get discounts on fuel and their employers receive tools to track spending. FleetCor collects a monthly fee from cardholders and service fees from vendors.
Clarke became CEO in 2000 after stints at consultant Booz Allen Hamilton Holding Corp. and Automatic Data Processing Inc., and has overseen the firm’s rapid growth. In the past 15 years, FleetCor has bought more than 70 companies and commercial account portfolios in the U.S. and overseas, according to regulatory filings.
Meanwhile, the CEO has kept a low profile. In a rare interview, he told Atlanta Business Chronicle in 2013 that FleetCor was “Atlanta’s best-kept secret.”
Short seller Andrew Left has been trying to focus more attention on FleetCor. In a pair of April reports, he alleged that the company cheats customers by charging a host of ancillary fees. He said interviews with more than two dozen former FleetCor employees revealed a network of fees including $50 a month to administer accounts, $10 to use the card, and $3.50 for inactive cards -- as well as a system to categorize customers based on their propensity to detect or complain about the charges.
“You buy a company doing the right thing, you make them do the wrong thing and you make a lot of money -- it’s a simple model,” said Left, head of Citron Research.
The Federal Trade Commission has received 438 billing complaints for FleetCor in the past six years, compared with 16 for WEX Inc., one of its largest competitors, the agency said in response to a Freedom of Information Act request first published by Capitol Forum.
Clarke rebuffed the short seller’s allegations during the May 1 conference call as “fake news and exaggerations.” The number of complaints relative to the size of FleetCor’s client base is lower than that of many rivals, he said.
“We’re in the business of satisfying clients or we wouldn’t have any,” Clarke told analysts. “We provide lots of value, lots of hard savings, we’ve got lots of satisfied clients and we retain 90 percent of the clients every year.”
FleetCor hasn’t been accused of wrongdoing by regulators and Wall Street has largely sided with the company. Fifteen of the 16 analysts included in Bloomberg’s consensus estimates have a buy recommendation on FleetCor with one rating it neutral. The share price, which fell after Left’s reports were published, has since recovered and is up 6.1 percent this year through Monday.
— With assistance by Jenn Zhao