Median pay for finance chiefs at the largest U.S. companies rose 7% during the 2020 fiscal year, largely driven by stock-based compensation. According to Partner Melissa Burek, the decision for boards to modify their pay plans amid the pandemic is not easy and requires good judgement. Approximately 30% of S&P 1500 companies that have held their annual meeting already modified their bonuses due to COVID.
CEO pay kept climbing in 2020 as some companies moved performance targets or modified pay structures in response to the pandemic and accompanying economic pain. Principal Shaun Bisman notes that the number of changes seen in incentive plans is unprecedented. In some cases, investors have responded by withholding support for company pay practices in annual advisory votes.
Partner Susan Schroeder affirms that, over the course of the pandemic, roughly a quarter of public companies have cut executive pay to some degree. However, as the economy continues to recover, larger companies have been more likely to restore pay levels while smaller firms are still struggling.
In several studies conducted by CAP, we found that CEO salary reduction has been a prevalent action taken by a majority of S&P 500 companies, with one-third of CEOs forgoing their salaries entirely. CAP’s COVID-19 research found that two-thirds of S&P 500 companies reducing CEO pay have also implemented furloughs or have cut broad-based employee compensation.
Partner Susan Schroeder explains how firms undergoing CEO transitions can strategically use the Executive Chairman role in their management succession plan to provide incoming CEOs with guidance and advice as they ease into their new role.
CAP Partner Eric Hosken and Associate Ryan Colucci share findings from CAP’s CEO Pay Ratio research, including why the ratio fluctuated so dramatically for some companies this year.
Founding Partner Kelly Malafis discusses CFO Pay trends.