Below is an excerpt from ISS Corporate Solutions’ recently released report “Annual Incentive Payouts: Are Target Goals Too Modest?”. The full report is available on the ISS Corporate Solutions online library.
The majority of U.S. CEOs achieved payouts on their annual incentive awards that were at or above target in 2022. While this is generally in line with recent historical trends it begs the question of whether target goals are being set too modestly. Against the backdrop of ongoing recession fears and a challenging operating environment for many S&P 1500 companies, more than 70% of CEOs achieved target or above-target payouts in fiscal 2022. In this three-part series, ISS Corporate Solutions examines recent payout levels for annual incentive awards, focuses on goal level achievement for earnings metrics, and explores the magnitude of goal changes relative to prior years.
KEY TAKEAWAYS
- Median payout for annual incentives at S&P 500 companies was $1.41 million in 2022
- Chief executives are achieving target or above payouts at elevated rates
- Despite significant changes in economic conditions over the last five years, the percentage of CEO payouts at or above target has remained relatively steady
- 54% of companies have achieved payout levels at or above target in two consecutive years
- A near 30-point spread in payouts exists between the highest and lowest performing industry
Authored by:
Roy Saliba, Managing Director, ISS Corporate Solutions
Sandra Herrera, Vice President ESG Content/Data Analytics, ISS Corporate Solutions
