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CEO and Executive Compensation Practices: 2019 Edition
November 06, 2019 | Report
What do the most recent corporate disclosures regarding compensation reveal?
Key Findings in this year’s edition include:
- Just as investors’ emphasis on “pay for performance” has led to an increase in the percentage of CEO compensation delivered via stock awards, so investors may encourage companies to extend the vesting and performance measurement periods of such awards.
- While enjoying greater discretion in designing performance-based compensation, compensation committees could find themselves on a collision course with investors if they choose measures that are viewed as de-linking pay from performance.
- Pay-ratio disclosure has not led to the anticipated extensive negative press coverage, but public scrutiny could intensify amid deteriorating economic conditions.
BRIEF
Compensation committee agendas are being shaped by the increasing emphasis on pay for performance, the greater flexibility companies enjoy in the design and implementation of incentive plans, and the continuing close scrutiny by investors—scrutiny that is likely only to increase in the event of an economic or market downturn.
CEO and Executive Compensation Practices: 2019 Edition is designed to provide a comprehensive set of benchmarking data and analysis that can support compensation committee members in the fulfillment of their responsibilities. The report delves into the most recent corporate disclosure by Russell 3000 companies to review individual elements of compensation packages, the evolving features of incentive plans, the results of say-on-pay votes, and the major board practices on pay design. Drawn from such a review, the following are key insights for what’s ahead in the field.
Just as investors’ emphasis on “pay for performance” has led to an increase in the percentage of CEO compensation delivered via stock awards, so investors may encourage companies to extend the vesting and performance measurement periods of such awards. In the S&P 500, the portion of CEO pay represented by stock awards (including restricted stock and perform
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