Below is an excerpt from ISS-Corporate’s recently released report “Earnings Goal Achievement in Annual Incentives – Are Target Goals for CEOs Too Soft?”. The full report is available on the ISS-Corporate online library.
More than two-thirds of U.S. CEOs achieved or exceeded their target goals and earnings goals in 2022, with one out of four reaching their maximum goal levels. While these achievement rates result in handsome rewards for executives, consistently elevated rates of achievement raise questions about the rigor of the goal-setting process and may set a dangerous precedent for future payout expectations. Part one of our three-part series examined recent payout levels for annual incentive awards. This second installment focuses on goal level achievement for earnings metrics, and the forthcoming piece will explore the magnitude of goal changes relative to prior years.
- CEOs have achieved their target goals at least 60% of the time over the last five years
- The achievement rates at target and maximum in particular are above established best practices
- In 2022, 68% of companies achieved target earnings goals, while 25% reached maximum levels
- 15% of companies exceeded their earnings target goals by 50% in each of the last five years
- A 70-point spread in achievement rates exists between the highest and lowest performing industries
By: Roy Saliba, Managing Director, ISS-Corporate
Sandra Herrera, Vice President ESG Content / Data Analytics, ISS-Corporate