By Joanne Cursinella, J.D.
ISS Analytics has presented its review of executive compensation trends so far this year in a report released on April 12, 2019. The key findings suggest continued increases in CEO pay across all market segments and most industries; that the proportion of stock-based compensation as a percentage of total pay continues to increase; that performance-based equity compensation also continues to increase; and that CEO pay ratios remain relatively unchanged on aggregate.
CEO pay growth. According to the report, CEO pay has increased “at a relatively fast pace” with the median pay for S&P 500 CEOs at $ 12.2 million, an increase of 50 percent since 2009, and the figure almost doubling for S&P 600 CEOs, with an increase of 95 percent since pay fiscal year 2009.
ISS Analytics says that the compensation increases are the result of greater portions of pay being paid in stock. The report notes that in fiscal year 2018, the average stock grant to S&P 500 CEOs is $7.2 million, compared to $3 million in pay for fiscal year 2009, and that stock-based compensation continues to increase, while the aggregate of all other components of pay remains relatively unchanged.
Say on Pay. The increased interest of shareholders on executive compensation brought a focus on performance-based compensation, the report notes. As a percentage of total equity compensation, performance-based equity almost doubled between 2009 and 2018, the report says. And the increase in performance-based pay has continued, according to the report, despite any concern about a reversal since the removal of tax deductions on performance-based pay previously allowed under provisions of Internal Revenue Code Section 162(m).
Pay ratios. The Dodd-Frank Act requires disclosures of CEO compensation relative to the pay of the median employee, and this requirement was first implemented in last year’s proxy disclosure filings, the report notes. So far, the report says, on aggregate, the data indicates no changes in CEO pay ratios compared to last year, and median employee compensation levels also remain comparable to last year.
ISS Analytics says it plans to continue to monitor and report on executive compensation trends.