March 18, 2021


Early Filers: A Tale of Two 2020s




Lauren Peek
Principal [email protected] 212-921-9374
Joanna Czyzewski
Senior Associate [email protected] 646-486-9746


CAP reviewed chief executive officer (CEO) pay levels among 50 companies with fiscal years ending between August and October 2020 (defined as the Early Filers). 2020 was a year of two different stories. Companies that were negatively impacted by COVID-19 had significantly lower annual incentive payouts in 2020 compared to 2019. Conversely, companies that faced fewer COVID-related headwinds generally had higher payouts year over year. This divide resulted in median CEO total direct compensation increasing +8% over 2019. This report covers 2020 financial performance, CEO actual pay levels and annual incentive payouts for the Early Filers.

2020 Performance

Median 2020 financial performance (revenue, pre-tax income and EPS) for the Early Filers was down although Total Shareholder Return (TSR) was up modestly. This suggests that shareholders recognize that COVID will likely have only a temporary impact on financial performance and, in general, a company’s overall strategy is expected to deliver strong performance in the future. Among the Early Filers:

  • Median revenue growth was flat year over year (-1.0%)
  • Median pre-tax income and EPS growth were down significantly from 2019 (-14.0% and -12.7%, respectively)
  • Median TSR was up modestly (+5.1%) from 2019

In general, median 2020 financial performance among the Early Filers was directionally aligned with median 2020 performance of the S&P 500.

Financial Metric

2019 Median 1-year Performance

2020 Median 1-year Performance

S&P 500

Early Filers

S&P 500

Early Filers

Revenue Growth





Pre-tax Income Growth





EPS Growth










Note: Reflects companies in the S&P 500 as of February 2021. For the S&P 500, financial performance and TSR are as of September 30, 2019 and September 30, 2020. For Early Filers, financial performance and TSR are as of each company’s fiscal year end.

CEO Actual Total Direct Compensation

Among Early Filers, median total direct compensation – base salary plus actual bonus payout plus grant-date value of long-term incentives (LTIs) – was up in 2020, increasing +8%. CEO pay was higher in 2020 due, in part, to an increase in annual incentive payout (up +5%), despite lower financial performance. Another reason for the higher median total direct compensation in 2020 was an increase to incentive compensation opportunities. Approximately 25% of companies increased the target annual incentive opportunity and 70% of companies increased the long-term incentive (LTI) grant date value. These increases were typically approved in the first quarter (e.g., September 2019 to January 2020, depending on fiscal year end) to recognize strong company and/or individual performance from the prior year.

Despite median pay being up modestly, 2020 is a tale of two years when considering the impact of COVID on CEO pay at the 25th and 75th percentiles. Companies that were negatively impacted, and as a result were more likely in the bottom quartile, saw a decline (-36%) in annual incentive payouts, while at the 75th percentile, companies’ annual incentive payouts were up 40% year over year. At the 25th percentile, total direct compensation was down slightly (-2%), while at the 75th percentile, it was up significantly (+23%). Two-thirds of companies making a COVID-related incentive adjustment paid out below target.

0%-36%-19%0%-2%3%5%5%5%8%6%40%32%22%23%-50%-40%-30%-20%-10%0%10%20%30%40%50%Base SalaryActual Annual IncentiveActual Total CashGrant-Date Value of LTITotal Comp1-Year Change in CEO Compensation (n=39)25th Percentile50th Percentile75th Percentile

Note: N = 39. Reflects same incumbent CEOs. Excludes temporary salary reductions due to COVID-19.

Pay changes in the chart above reflect base salary levels (and increases) that were set at the beginning of the year and exclude any temporary salary reductions due to COVID. Seventeen companies in our study reduced CEO base salaries for all or a portion of the year; a majority of these companies, also took COVID-related incentive plan actions as discussed in an earlier CAPIntel report. For companies that had a temporary reduction in CEO salary, it was typically reduced by 10% to 50% for approximately four to six months. Most CEO salaries returned to pre-pandemic levels by fiscal year end.

Annual Incentive Plan Payout

While 2020 median CEO annual incentive payout was up, the payout as a percentage of target was lower than in 2019, which is directionally aligned with lower financial performance. The median annual incentive payout in 2020 was 84% of target. There is significant spread between 25th percentile and 75th percentile in 2020, continuing to show the divide between companies negatively impacted by COVID-19 and those that were not. Annual incentive payout at the 25th percentile was closer to threshold (40% of target) while payout at the 75th percentile was well above target (137% of target).

Summary Statistics

Annual Incentive Payout as a % of Target




75th Percentile








25th Percentile




Despite performance being down for the group as a whole, median 2020 financial performance for companies with at- or above-target payouts (20 companies) was up; TSR grew significantly for these companies in 2020 (+24.2%). Companies with below-target payouts had lower financial performance in 2020 vs. 2019. TSR for companies with below-target payouts, however, was on par with 2019.

Financial Metric (1)

2019 Median 1-year Performance

2020 Median 1-year Performance

Below target payout (n=21)

At/above target payout (n=24)

Below target payout (n=25)

At/above target payout (n=20)

Revenue Growth





Pre-tax Income Growth










(1) Financial performance and TSR is as of each company’s fiscal year end.

While 2020 was a tumultuous year for the Early Filers as a group overall, companies that made incentive plan adjustments for 2020 (retroactive incentive actions) were more significantly impacted by the pandemic; median annual incentive payout as a percentage of target was 79% of target and financial and TSR performance were down. Interestingly, TSR was the differentiating performance indicator between companies taking retroactive actions and those that did not. Median TSR was down modestly (-4.7%) for companies taking action and significantly up (+20.6%) for those not taking action.

Regardless of whether a company took COVID-related incentive plan actions or not, 25th percentile payout was around threshold indicating that some companies “took the hit” on performance and did not adjust payouts. The 75th percentile payout for companies that took retroactive incentive actions was around target with only a handful of these companies having a payout above target.

Summary Statistics

Annual Incentive Payout as a % of Target

Cos Taking Retroactive Annual Incentive Actions (n=22)

Cos Not Taking Retroactive Annual Incentive Actions (n=23)

75th Percentile






25th Percentile



Financial Metric

2020 Median 1-year Performance

Revenue Growth



Pre-tax Income Growth






Note: N = 45. Excludes companies that do not have a target bonus opportunity for the CEO.

In 2020, more than half (56%) of the Early Filers had an annual incentive payout that was below target. This is higher than 2019 (47%) and 2018 (35%). The number of companies with a payout below 50% of target and those with a payout at or above 150% is another indication of the tale of two 2020s. This year, 27% of companies had a payout below 50% of target and 24% of companies had a payout at or above 150% of target.

9%16%27%26%31%29%42%42%20%23%11%24%0%10%20%30%40%50%60%70%80%90%100%201820192020Annual Incentive Payout as a Percentage of Target<50%50% - 100%100% - 150%> 150%

Note: N = 45. Excludes companies that do not have a target bonus opportunity for the CEO.

Looking Ahead

As calendar year companies begin to file their 2021 proxy statements, we expect to continue to see a tale of two 2020s with some companies having strong financial performance resulting in at- or above-target annual incentive payouts, while others are balancing lower financial results with rewarding employees during the pandemic. For companies that were more negatively affected by COVID-19, we anticipate compensation committees will either exercise discretion or adjust underlying financial results to recognize COVID’s impact on financial performance and how well the management team and employees weathered the pandemic.

2021 will continue to be a challenging year as companies navigate the COVID-19 economic recovery and set goals for annual and long-term incentive plans. While the vaccination process is well underway, it is still unclear when the economy will return to pre-pandemic levels. This uncertainty makes it difficult to set goals. In order to mitigate some of the near-term ambiguity, we anticipate some companies may change their annual and long-term incentive designs by widening the performance leverage curves, using relative metrics in long-term performance plans, and increasing the weighting of time-based equity.

Investors will be reading the proxy statement to not only understand what actions a company took, but why. Disclosure of the impact of COVID on company results and business operations will be key, regardless of how well a company performed. The proxy statement can be a powerful tool to inform investors why the compensation committee’s actions were the right decision for the company, particularly during the pandemic.

Early Filers’ Company Sample

CAP’s study reflects 50 companies with fiscal years ending between August and October 2020. Industry sectors reviewed include: Consumer Discretionary, Consumer Staples, Financials, Health Care, Industrials, Information Technology and Materials. Revenues for these companies ranged from $2 billion – $275 billion (median revenues of $8 billion); median fiscal-year-end market capitalization was $10B.

Kyle White provided research assistance for this report.