April 10, 2023


Update: Pay Versus Performance Disclosure – Findings from 100 S&P 500 Filers




Kelly Malafis
Founding Partner [email protected] 212-921-9357
Kyle White
Associate [email protected] 845-418-9535
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. This report is an update to our early filers report from 3/10/2023 and provides insights into how companies approached this first year of the PvP disclosure requirement.

Compensation Advisory Partners created a PvP Tracker and analyzed 100 definitive and preliminary proxy statement filings among S&P 500 companies that filed as of 3/16/2023. Our sample covers large-cap companies across multiple industries, with a median revenue of approximately $14B and median market cap of approximately $32B. 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.). Our key findings are summarized below and are substantially similar to our findings from the 25 earliest filers, with the exception of a meaningful decrease in the prevalence of non-financial metrics in the tabular list of “most important” performance measures. In the new sample, not only are less companies disclosing non-financial measures, but less of such measures are ESG-related, with more companies opting to include operational-based non-financial measures if they choose to include any at all. We also expanded our analysis and looked at the prevalence of company-selected measures by industry.

Comparator Group used to calculate Total Shareholder Return (TSR)

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 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 TSRIndustry/Sector IndexCustom Peer GroupSame as 10-K Graph81%19%92%

Note: Excluded from the chart above are four companies that selected a General Industry Index as their comparator group.

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, 97% of companies selected a financial measure while three companies 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 full sample.

EPS/Operating EPS28%16%15%14%12%9%5%3%EBIT/EBITDAOtherCash FlowRevenue/Sales GrowthNet Income/EarningsROE/ROTCErTSRCompany-Selected Measure Prevalence

Note: Values above are not additive to 100%, as two companies use two company-selected measures.

With our larger sample, we also looked into Company-Selected Measure trends by industry. The chart below displays the two most common company-selected measures for industries with at least 10 companies in our sample.

50%23%33%28%50%29%58%17%50%20%Financials (n=22)Most Prevalent Company-Selected Measures By SectorEPS/OperatingEPSEPS/OperatingEPSEPS/OperatingEPSEBIT/EBITDAEBIT/EBITDAEPS/OperatingEPSEBIT/EBITDACashFlowRevenue/SalesGrowthROE/ROTCEIndustrials (n=17)Healthcare (n=14)Utilities (n=12)Materials (n=10)

There were three other industries that had at least 5 companies in our sample: Energy (n=7), Consumer Discretionary (n=5) and Information Technology (n=5). The most prevalent company-selected measure for these industries were:

  • Energy: Cash Flow (43% prevalence)
  • Consumer Discretionary: EBIT / EBITDA and Net Income / Earnings (both with 40% prevalence)
  • Information Technology: Revenue / Sales Growth (60% prevalence)

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 4.3 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.

80%20% Only FinancialFinancial & Non-FinancialMost Important Measures:Financial vs. Financial & Non-Financial 45%30%20%5%OperationalOnlyESG OnlyOperational &ESGIndividualNon-Financial Measures By Category

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.

87%13% GraphicNarrative OnlyShowing the Relationship between Compensation Actually Paid and TSR/NetIncome/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 21 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 did note that one company included the disclosure between the CD&A and the SCT. 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 the sample spanned 2 to 8 pages, with a median of 4 pages and average of 4.2 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

Two companies 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. One company only included one year of data due to the completion of a spin-off. A few companies chose to use additional measures to display the relationship between Compensation Actually Paid and the metrics used in their incentive plans.


Overall, the trends among our 100 company sample are substantially similar to our early filers findings. Many aspects of the 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. 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 100 S&P 500 companies that filed a definitive or preliminary proxy as of 3/16/2023. The sample is broken out by sector, trailing-twelve month revenue range, and market capitalization range as of March 31, 2023, as follows:

Financials22%Companies by SectorOther8%Materials10%Utilities12%Health Care14%Industrials17%Energy7%InformationTechnology5%ConsumerDiscretionary5% Companies by Market Capitalization Companies by RevenueLess than$15B22%$15B - $25B18%$25B - $50B33%$50B - $75B13%Greater than$75B14%Greater than$30B19%Less than$5B15%$5B - $10B21%$10B - $20B31%$20B - $30B14%