March 10, 2023


Pay Versus Performance Disclosure – Findings from the Early S&P 500 Filers




Kelly Malafis
Founding Partner [email protected] 212-921-9357
Matthew Schwarcz
Analyst [email protected] 646-568-1174
John Swift
Analyst [email protected] 646-568-1175


When the SEC finalized its proposed rule for Pay Versus Performance (PvP) disclosure in August 2022, the preparation for the 2023 proxy season suddenly became a fire drill. Management teams and their advisors were trying to get their arms around a new definition of pay called “Compensation Actually Paid” and the necessary calculations for the new disclosure. In addition to the calculations, there were questions around what this new disclosure would look like based on the SEC's rules and, being the first of its kind, what other companies were doing. Our report provides insights into how companies with early filing dates approached this first year of the PvP disclosure requirement.

Compensation Advisory Partners created a PvP Tracker and analyzed 25 definitive and preliminary proxy statement filings among S&P 500 companies that filed as of 3/6/2023. Our sample, which we refer to as ‘early filers’, covers multiple industries. The early filers have median revenue of approximately $15B and median market cap of approximately $29B. We focused our analysis on aspects of the disclosure where companies had choices (i.e., comparator groups, company-selected measure, location of disclosure in the proxy, etc.) and also made observations on unique findings. Our key findings are summarized below.

Comparator Group for Total Shareholder Return (TSR) Calculations

The majority of companies in our sample elected to use an industry index rather than a custom benchmarking peer group, most often the same industry index that companies use for the Stock Performance Graph in the 10-K. This trend was anticipated as many companies wanted to avoid the SEC requirement to explain changes to a custom peer group in a footnote and compare the Company’s TSR to both the old and the new peer groups. The next most common comparator group was the compensation benchmarking peer group listed in the Compensation Discussion & Analysis (“CD&A”). Companies overwhelmingly chose a comparator group that was also used for the Stock Performance Graph.

Comparator Group for TSR79%21%96%Industry/Sector IndexCustom Peer GroupSame as 10-K Graph

Note: Excluded from the chart above is one company that selected the S&P 500 Index as the comparator group.

Unique Observations: One company used two industry indices for TSR comparisons, consistent with the 10-K performance graph disclosure. One company selected the S&P 500 Index which seems inconsistent with the SEC’s disclosure rules, since these called for “a published industry or line-of-business index”. Another company used an industry index for PvP TSR comparisons in 2020 and 2021 and changed to a custom peer group for 2022.

Company-Selected Measure

Companies must choose a financial performance metric viewed as the “most important” financial measure used to link Compensation Actually Paid to company performance. This measure can be a non-GAAP measure. Among our sample of early filers, 96% of companies selected a financial measure while one company selected relative total shareholder return. Of the companies that selected a financial measure, the vast majority defined this measure as adjusted or non-GAAP. This is not surprising as most companies use an adjusted or non-GAAP measure for incentive compensation plans. The chart below summarizes the prevalence of company-selected measures across our sample. We expect to have further insight on trends by industry when we analyze a larger sample.

28%24%16%12%8%8%4%EPS/Operating EPSCash FlowEBIT/EBITDAOtherSales GrowthROE/ROTCErTSRCompany-Selected Measure Prevalence

Unique Observations: One company listed a financial measure and 3-year TSR in the PvP table although the corresponding narrative appeared to indicate that the financial measure was the Company-Selected Measure. The 3-year TSR may have been added for context.

Tabular List of Most Important Measures

Another requirement of the PvP rules is to list, in unranked order, three to seven of the company’s “most important” financial performance measures that link to Compensation Actually Paid. The list must include the Company-Selected Measure and may include financial (inclusive of TSR and relative TSR) and non-financial measures so long as there are at least three financial measures. Among our sample we found that the number of measures in the tabular list was 4 at median and 4.6 on average. Disclosure of only financial measures was far more prevalent than disclosure of financial and non-financial measures. Among the companies that disclosed non-financial measures, the measures were typically operational and ESG measures or a combination of operational and ESG objectives. One company listed individual performance as a non-financial measure.

64%36%Only FinancialFinancial & Non-FinancialMost Important Measures:Financial vs. Financial & Non-Financial56%22%11%11%Operational / ESGESG OnlyOperational OnlyIndividualNon-Financial Measures By Category

Unique Observations: One company had a different list of important measures for the Principal Executive Officer (PEO) and for non-PEO Named Executive Officers (NEOs). We also found two companies that listed less than 3 financial measures as the most important measures.

Explanation of Relationships between Compensation and Performance

Companies are required, in either narrative or graphic form, to describe (1) the relationship between Compensation Actually Paid to the company’s NEOs and the company’s financial performance measures included in the table (i.e., TSR, Net Income and the Company-Selected Measure), and (2) the relationship between the company’s TSR and the TSR of the peer group. The vast majority of our sample used bar charts and/or line graphs to display the required relationships.

84%16%GraphicNarrative OnlyShowing the Relationship between Compensation Actually Paid and TSR/Net Income/Company-Selected Measure - Graphic or Narrative?

Some companies just displayed the graphs and did not make any statements to comment on or to explain the relationships. In instances where companies added narrative to the graphs, comments related to items such as the pay and performance alignment, an explanation based on stock price or other performance, and an explanation of the metrics used in incentive plans (versus the requirement to disclose Net Income).

Variation between Summary Compensation Table (SCT) and Compensation Actually Paid

The relationship between Compensation Actually Paid and SCT reported numbers varied significantly by year. For three companies in our sample, Compensation Actually Paid was negative in one of three years. The chart below shows the degree of variability across each of the three years for the PEO. When PEO Compensation Actually Paid and SCT values for all three years are summed, the ratio tends to align to company 3-year TSR performance. While relationships by company vary, on balance there is alignment, likely because the majority of PEO compensation is delivered in stock-based compensation.

Ratio of PEO Compensation Actually Paid to SCT Pay

Ratio PEO Compensation Actually Paid to SCT (3-year Sum)

Company 3-year TSR






75th Percentile






50th Percentile






25th Percentile






Location of Pay Versus Performance Disclosure

None of the companies in our sample included their PvP disclosure in the CD&A. The vast majority included the disclosure following the already required tables and often near the CEO Pay Ratio disclosure, another Dodd-Frank disclosure requirement. The placement of the new PvP disclosure reinforces the view that the required analysis of the new rules were not part of the compensation decision-making process of the compensation committee. We do not expect the PvP outcomes to become a primary factor in analyzing future compensation decisions but it will likely be part of the discussion going forward.

Length of Disclosure

Disclosures among early filers spanned 3 to 7 pages, with a median of 4 pages and average of 4.3 pages. Since this is the first year of required disclosure, most companies focused on complying with the requirements and minimizing additional voluntary disclosure. The longer disclosures were often the disclosures with the most detailed footnotes and charts reconciling the Compensation Actually Paid calculations.

Voluntary Disclosures

One company disclosed a 5-year table which will ultimately be required, although only three years were required in this first year. This is not surprising that most companies did not go beyond the minimum required given the amount of work needed to prepare the underlying calculations. A few companies chose to use additional measures to display the relationship between Compensation Actually Paid and the metrics used in their incentive plans.


Many aspects of the early filers’ new PvP disclosure are not surprising, since companies focused on compliance with the new rules and minimized additional voluntary disclosures. The outcomes of Compensation Actually Paid relative to SCT values varied significantly based on company and stock price performance and potential payouts of past awards, but we observed a high degree of alignment among our sample. As most CEOs and other NEOs have the majority of their pay tied to long-term incentives, point-in-time stock price had a significant impact on the Compensation Actually Paid amounts. Investors and proxy advisory firms will want to digest the outcomes of this new disclosure and many have already stated that they will continue to use their own modeling to assess pay and performance. Compensation Advisory Partners expects compensation committees and management teams to continue to use their current frameworks for determining executive compensation but will want to understand how the new PvP disclosure will look every year and how they compare to peers.


Companies included in the sample reflect S&P 500 companies that filed a definitive or preliminary proxy as of 3/6/2023. They are listed by Sector in alphabetical order.



Genuine Parts

Consumer Discretionary


Consumer Staples


Consumer Staples

APA Corporation


EQT Corporation


Marathon Petroleum


Schlumberger Limited


Bank of New York Mellon


Capital One Financial


Cincinnati Financial


Globe Life Inc.


SVB Financial Group



Health Care

Eli Lilly

Health Care

IQVIA Holdings Inc.

Health Care

A. O. Smith






Raytheon Technologies


Textron Inc.


Dow Inc.


Federal Realty Investment Trust

Real Estate

AES Corporation


American Electric Power