ROCKVILLE, Md. (September 21, 2023) –ISS Corporate Solutions, Inc. (ICS), a leading provider of compensation, governance, cyber risk monitoring, and sustainability offerings to help companies improve shareholder value and reduce risk, today announced the results of an analysis of annual incentive awards given to CEOs at S&P 1500 companies between 2018 and 2022, finding that more than 70 percent of CEOs achieved target or above-target payouts in fiscal 2022. Over the five-year period studied, the percentage of CEOs achieving payouts at or above target also remained relatively unchanged despite significant variability in economic conditions, and payout rates were consistently above the 50-60 percent range that is considered best practice by consultants, academics, and practitioners. The findings call into question whether boards and compensation committees are setting sufficiently rigorous targets for their CEOs.
Other findings from the analysis include:
- Fifty-four percent of companies achieved payout levels at or above target in two consecutive years during the study period.
- Company size significantly impacted the value of payouts, with S&P 500 companies reporting a median of $2.3 million in incentive payouts last year, compared with $925,000 for those in the S&P 600. Despite the difference in absolute dollars, however, each S&P 1500 market cap grouping has exhibited similar payout growth, with median payouts growing 19 percent since 2018.
- Over 90 percent of S&P 1500 companies CEOs with an annual incentive award were issued a payout of at least threshold – the minimum payout that can be achieved – during the study period, save for 2020 during the pandemic.
- A near 30-point spread in payouts exists between the industry segments with the highest and lowest payouts. In 2022, only 57 percent of CEOs in the Automobiles & Components industry achieved at or above target payouts, while 85 percent of chief executives in the Financial Services industry achieved that feat.
“The trend of CEOs receiving at or above target payouts, while consistent with results in recent years, may raise concern with investors in the context of ongoing recession fears and a challenging operating environment for many companies,” said Roy Saliba, Managing Director at ISS Corporate Solutions. “When payout rates consistently stray beyond the range of what is considered best-practice, it often indicates an underlying issue with the design of the performance plan, whether with the metric selection, the formulation of the payout curve, or goals that are either too easy or too hard to achieve.”
Read the full ICS analysis here.
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About ISS Corporate Solutions
Companies turn to ISS Corporate Solutions, Inc. (“ICS”) for expertise in designing and managing corporate governance, executive compensation, cyber risk monitoring, and sustainability programs that align with company goals, reduce risk, and manage the needs of a diverse shareholder base by delivering best-in-class data, tools, and advisory services. Our global client base extends to companies located across North America, Europe, and Asia. ICS is a wholly owned subsidiary of Institutional Shareholder Services Inc. (“ISS”) and is headquartered in Rockville, Maryland. ISS’ Global Research Department, which is separate from ICS, will not give preferential treatment to, and is under no obligation to support, any proxy proposal of a company (whether or not that company has purchased products or services from ICS). Similarly, ISS’ responsible investment research and analytics teams will not provide preferential treatment to, and is under no obligation to provide a favorable rating, assessment and/or any other favorable result to any corporate issuer (whether or not that corporate issuer has purchased products or services from ICS). No statement from an employee of ICS should be construed as a guarantee that ISS will (a) recommend that is clients vote in favor of any particular proxy proposal nor (b) provide a favorable rating or other assessment of any corporate issuer. For more information, please visit https://www.isscorporatesolutions.com/.
Media Contact:
Audrey Dedrick
Associate, Communications
media@isscorporatesolutions.com
Despite Economic Headwinds, Seven in Ten U.S. CEOs Achieved Target or Above-Target Payouts
ROCKVILLE, Md. (September 21, 2023) –ISS Corporate Solutions, Inc. (ICS), a leading provider of compensation, governance, cyber risk monitoring, and sustainability offerings to help companies improve shareholder value and reduce risk, today announced the results of an analysis of annual incentive awards given to CEOs at S&P 1500 companies between 2018 and 2022, finding that more than 70 percent of CEOs achieved target or above-target payouts in fiscal 2022. Over the five-year period studied, the percentage of CEOs achieving payouts at or above target also remained relatively unchanged despite significant variability in economic conditions, and payout rates were consistently above the 50-60 percent range that is considered best practice by consultants, academics, and practitioners. The findings call into question whether boards and compensation committees are setting sufficiently rigorous targets for their CEOs.
Other findings from the analysis include:
“The trend of CEOs receiving at or above target payouts, while consistent with results in recent years, may raise concern with investors in the context of ongoing recession fears and a challenging operating environment for many companies,” said Roy Saliba, Managing Director at ISS Corporate Solutions. “When payout rates consistently stray beyond the range of what is considered best-practice, it often indicates an underlying issue with the design of the performance plan, whether with the metric selection, the formulation of the payout curve, or goals that are either too easy or too hard to achieve.”
Read the full ICS analysis here.
###
About ISS Corporate Solutions
Companies turn to ISS Corporate Solutions, Inc. (“ICS”) for expertise in designing and managing corporate governance, executive compensation, cyber risk monitoring, and sustainability programs that align with company goals, reduce risk, and manage the needs of a diverse shareholder base by delivering best-in-class data, tools, and advisory services. Our global client base extends to companies located across North America, Europe, and Asia. ICS is a wholly owned subsidiary of Institutional Shareholder Services Inc. (“ISS”) and is headquartered in Rockville, Maryland. ISS’ Global Research Department, which is separate from ICS, will not give preferential treatment to, and is under no obligation to support, any proxy proposal of a company (whether or not that company has purchased products or services from ICS). Similarly, ISS’ responsible investment research and analytics teams will not provide preferential treatment to, and is under no obligation to provide a favorable rating, assessment and/or any other favorable result to any corporate issuer (whether or not that corporate issuer has purchased products or services from ICS). No statement from an employee of ICS should be construed as a guarantee that ISS will (a) recommend that is clients vote in favor of any particular proxy proposal nor (b) provide a favorable rating or other assessment of any corporate issuer. For more information, please visit https://www.isscorporatesolutions.com/.
Media Contact:
Audrey Dedrick
Associate, Communications
media@isscorporatesolutions.com
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