Below is an excerpt from ISS-Corporate’s recently released paper “What ‘Perks’ Can Tell Us About Executive Compensation Part 2: How a Small Component in Pay Reveals Insights into Corporate Trends”. The full paper is available for download from the ISS-Corporate online library.
In a follow-up to our whitepaper, “What ‘Perks’ Can Tell Us About Executive Compensation,” ISS-Corporate reviewed the pay structures for Russell 3000 companies that held annual general meetings in the first nine months of 2024 to analyze the usage and magnitude of perquisites in fiscal 2023. In this update, we continue to focus on perquisites that are most common amongst Russell 3000 companies and have excluded those that are rarely adopted.
KEY TAKEAWAYS
- The number of Russell 3000 companies (excluding the S&P 500) that provide at least one perquisite to their CEO increased by 2.4 percentage points, while the S&P 500 remained steady.
- Overall, the median value of perquisites has increased faster than CEO pay over the past five years.
- While perquisites may not play a major role in investors’ decisions to support Say-on-Pay (MSOP) proposals, companies that provide larger aggregate perquisites tend to have lower MSOP vote support.
- Security perquisites, while relatively rare, are rapidly increasing in prevalence for the S&P 500 and Russell 3000. In 2023, 16.2 percent of S&P 500 and 2.1 percent of Russell 3000 companies provided this perquisite, up from 11.9 percent and 0.8 percent in 2019 for the S&P 500 and Russell 3000, respectively With increasing concerns regarding the security of CEOs, both the prevalence and value of these benefits are expected to increase moving forward.
Perquisites or “perks” are generally a small component of executive compensation, a fact that has changed little from 2023 to 2024. However, these benefits tend to draw some scrutiny from shareholders and the media because of their often-unclear connection to performance criteria.
Perquisites accounted for 1.8 percent of total median CEO pay for S&P 500 companies and 5.3 percent for the Russell 3000. Approximately two-thirds of S&P 500 companies offered at least one perquisite to CEOs. For the Russell 3000 (excl. S&P 500), the number of companies offering at least one perquisite rose 2.4 percent year-over-year (YoY) to 37.6 percent.
By:
Christian Darmanin, Senior Associate, Compensation & Governance Advisory, ISS-Corporate
Samantha Greenwald, Associate, Compensation & Governance Advisory, ISS-Corporate
Kevin Kim, Associate, Compensation & Governance Advisory, ISS-Corporate
