Partner Melissa Burek and Principal Michael Bonner were quoted in Agenda discussing incentive metric trends. In the article, Melissa and Michel discuss how large companies are increasingly using nonfinancial or strategic metrics in their executives’ annual incentive plans, as well as using more metrics than they did in the recent past. Although there isn’t a major difference in annual incentive payout patterns between companies that do and don’t use nonfinancial metrics, comp committees still need to be extra careful that the use of nonfinancial metrics doesn’t lead to payouts that are misaligned with the company’s overall performance.
Principal Joanna Czyzewski was quoted in Agenda discussing S&P 500 CEO pay ratios. In the article, Joanna discusses how the gap between CEO and median employee pay has increased since 2018, and so has shareholder scrutiny of human capital oversight.
Principal Shaun Bisman was quoted in Agenda discussing the Say on Pay voting outlook for 2024. Compared to recent years, support for executive pay programs is expected to rise for 2024 proposals, as compensation plans received improved support in 2023. During the pandemic, some public company boards used special retention awards and other measures to increase incentive payouts, which resulted in criticisms from institutional investors and proxy advisory firms (resulting is lower support for executive pay programs). Early 2024 voting shows that say-on-pay support is close to returning to pre-pandemic levels.
Principal Shaun Bisman was quoted in Agenda discussing Say on Pay changes to Form N-PX. Significant changes to a regulatory filing required from institutional investors will allow boards more insight into their shareholders’ voting patterns (regarding compensation). These disclosures are likely lead to a more beneficial shareholder outreach process. Under changes to Form N-PX finalized by the SEC in 2022, institutional investors will need to disclose their say on pay vote (as well as other compensation-related votes). The 2024 proxy season will be the first subjected to this new level of transparency as the rule became effective for votes cast after June 30, 2023 (most votes take place in the first half of the year).
CAP Principal Ryan Colucci was quoted in Agenda discussing the Board research he performed. One of the findings highlighted in the article discusses how Board leaders are less likely to serve on the audit committee because of the specialized expertise required of the role. Audit committees require chairs with more hard skills and experience with financial statements, as opposed to nom-gov and compensation committees that rely on softer, less mechanical skills.
Principal Shaun Bisman was quoted in Agenda’s recent article discussing how companies are getting creative with LTI plans. Bisman sheds light on the fairly uncommon approaches he’s seen and forecasts bonuses to pay at or below target.
Joanna Czyzewski discusses how monitoring executive pay ratios can be a helpful tool in managing your talent strategy. CAP reviewed CEO and other named executive officer pay across S&P 500 for the most recent fiscal year and discovered at median, CEO pay was 2.3x the next most highly paid NEO. For every $1.00 paid to the next most highly paid NEO, the CEO was paid approximately $2.30.
